Wealth distributed, not welfare.—In considering the principles of fair distribution among all the parties contributing to production of wealth, it is necessary to remember that wealth and not welfare is the subject of thought. A child may have equal right to welfare with his father, but cannot in any sense have equal ownership of wealth. The welfare of a complete imbecile may be the care of the state, but he can in no sense control wealth. Distribution of wealth cannot, therefore, include the subjects of charity, but must be confined to a study of the natural relations between individual owners of wealth or individual contributors to production, which make control of a portion of accumulated wealth essential to individual welfare.
A pound of tea may include in its value the efforts of a hundred different persons. What are the principles upon which those hundred people may be fairly compensated by the actual consumer of the pound of tea? This [pg 234] illustrates the complexity of the whole subject of distribution. No drinker of tea would dare to settle the question of fair distribution arbitrarily. No one would even offer a theory by which a perfect settlement could be reached. Yet when the pound of tea is put upon the pantry shelf, the fifty cents paid for it has already been divided into a hundred unequal portions adjusted by some method of custom to meet the ideas of every helper in the long list. Each has had some portion of the wealth produced, though the distribution may have taken place in different countries, under different laws and customs, through a period of months or years. This distribution involves the whole question of industrial freedom, and rests finally upon the principle of equity as applied to ownership of one's powers and the product of those powers. It also involves, to a certain extent, the decision of what is properly wealth and what is properly a part of universal welfare.
The important questions connected with the subject will not be satisfactorily settled until a reasonable adjustment of all claims is reached by the masses engaged in production. The modern discussions of the interests of laborers are proof that the world is thinking more and more of individual rights in property, and no sweeping assertions as to inequity of property rights help to solve the questions. It is because each individual has a distinct equity in what is produced in part by his efforts that there is need of better adjustment. All reforms, therefore, must be along the line of fair distribution, or fail of their end.
Distribution by exchange.—Ordinary observation [pg 235] shows that distribution is made chiefly in the customary method of exchange. A pound of butter may find its way from the farmer's dairy to the actual consumer in a distant country. In its final value, the consumer compensates the retail dealer for his services in handling it and for advance payments, including every other handler and every other service, down to the boy who drove the cows to pasture. If the system of universal exchanges is free and fair, each has received his fair compensation. In general, then, distribution of wealth is made automatically in the ordinary processes of production, exchange itself being one of the steps by which value to the consumer becomes value also to the producer.
Fair exchange above laws.—Under perfect freedom of exchange, the general law of supply and demand already illustrated is more effective than any laws can be in adjusting wages or profit to efforts in production, and in adjusting interest or rent or both to the capital employed or to other means of production controlled. Any customs or laws which interfere with natural conditions of supply and demand hinder rather than help toward a fair adjustment. In any progressive community such laws will surely fail, for the reason that in making such laws human nature is in conflict with itself. The history of increasing individual welfare in any part of the world gives a story of more ready and free competition in open market for all commodities and all services. In perceiving this we must not overlook the fact that fraud and ignorance, as well as arbitrary power, stand opposed to fair exchanges. Nor must we [pg 236] be satisfied with any condition which involves meeting restrictions with restrictions or force with force. Such conditions must be but temporary.
Actual and nominal compensation.—In considering compensation for any services, it is necessary to distinguish carefully between the actual compensation in welfare and the nominal compensation in money. A farmer in Nebraska may get a larger return for his labor with corn at 15 cents a bushel than he could in Massachusetts with corn at 40 cents a bushel. Just so a wage-earner, receiving $1.50 a day in Ohio, might lose in welfare by exchanging work with his neighbor in New Mexico, who gets $2.50 a day. This means that $1.50 in Ohio may buy more comfort than $2.50 can buy in New Mexico. This is very important in comparing the wages of different classes of workmen in the same country, as well as the wages of similar workmen in different countries. It has an important bearing, too, upon relative profits and interest. The actual compensation in welfare is the natural basis for adjustment in all distribution, and the law of supply and demand rests directly upon this.
Wages, profits, interest and rent take the product.—It is common to consider distribution as made in the forms of wages for labor given without risk as to the product, profits to the one whose labor is associated with risk of loss as well as gain, interest to the one who furnishes capital in any form and waits for his compensation, and rent to the landlord, or owner of estate, whose property is used for a definite time and returned. It is evident that any advantage received in any of these [pg 237] ways, at any time, must come from the actual available goods in store suitable for division and consumption. The farmer cannot pay his hired hand with his farm, though he may be able to do so with his products. The farmer himself cannot realize his profits until he has the proceeds of his work in the shape of consumable goods. So, at any particular time, the total of products fit for consumption makes the source from which all distribution must come. Debts and credits can have no consideration in the total, for the reason that they exactly offset each other. A general conflict of interested persons as to wages, profits, interest or rent comes from the difficulty of sharing in the actual goods at hand. The relation of each to the whole depends upon circumstances to be discussed in future chapters. It is certain that the larger proportion of daily production goes to the mass of the people who consume their share from day to day. It is estimated that fully 80 per cent of such wealth is used up by those who contribute no use of capital to the productive force. It seems probable also that this ratio is increasing rather than diminishing, but no statistics are sufficient to show the exact facts.
Cheap standards of living.—In the natural competition of laborers with each other, the general standard of living—physical, intellectual and moral—have an important bearing. The Chinaman in this country competes with the American upon a wholly different plane of living. His habitual needs being less, he is willing to work for wages that will not tempt the native American. If he can do the same work, living as he [pg 238] does, he necessarily becomes a cheaper force in production, and the American must find a better field for his energies or go without employment. Under ordinary circumstances, the introduction of laborers able to live more cheaply acts upon the better class of laborers exactly like the introduction of labor-saving machinery. It first brings hardship from direct competition, but the cheapening of products brings enlarged demands and so gives new impetus to production, requiring the very skill which the better class of laborers alone can furnish.
Thus the employment of Chinamen upon railroad embankments made places for native laborers as section bosses and engineers. The Huns and Italians that underbid the Irish miners in Pennsylvania have destroyed the “Molly McGuires” by making the same men responsible for larger enterprises. Yet the standards of living, which show a constant improvement, indicate a truer freedom of competition and a clearer recognition of individual wants and abilities. No one can watch the development of any country without realizing that its thrift, enterprise and progressive welfare depend largely upon increasing wants. Men who live best produce most and enjoy most.
Wages distinguished from profits.—In discussing the subject of wages and profits, it is necessary to remember that both are compensation in different ways for actual exertion. If in estimating profits we sometimes include a return for the use of capital, it is from incomplete analysis of the forces in use, since the interest upon capital can easily be separated in all actual practice, and in most enterprises is counted as a distinct expense to be provided for in entering upon the undertaking. The profits really belong to the management of any undertaking, as return for the exertion in that management. In every-day use the term wages is applied only to the stipulated amount paid from time to time for services rendered to another. There is practically no difference between such payments made for service by the hour, day, week, month or year. If, however, the engagement for service is by the year, the name salary is more likely to be given than wages.
Further, the term wages is most distinctly applied when the service is rendered as a task, and wage-earners when found in considerable bodies are usually called operatives, under the natural classification of labor explained and illustrated in Chapter III (page 35).
[pg 240]The services of an overseer are much more likely to be permanently required, and his wages are therefore called a salary, estimated by the year even though payments be made monthly or even weekly. In this case, the labor is chiefly executive, taking a higher rank because of the greater powers required. In this case the overseer is supposed to have definite plans provided for his work, and to carry out those plans to the best of his ability.
If, in contrast with this, one's efforts are given to managing a business, devising the ends to be accomplished as well as planning for their accomplishment, he is said to have entire responsibility for results and to receive what he can make out of the business. His exertion is chiefly speculative labor, and the returns for his speculation or foresight—often effort of the severest kind—are termed profits. Such efforts have already been illustrated in Chapter III, page 35. No generally accepted name has been given to the one who thus carries the entire responsibility of the business, but the word manager conveys to most people the general idea involved. While it is true that a manager may sometimes work for a salary, in general the very inventive ability required for success makes the stimulant of profits the most natural means of securing higher effectiveness. Most managers, even of stock companies, must from the nature of the case be at least sharers in the profits. Farmers easily distinguish between those who work for stipulated wages, often called farm hands, and the farmer himself, who gets the pay for all his endless variety of labor, including his constant planning, in the shape of profits.
[pg 241]Wages defined.—Hence it is fair to define wages as a stipulated sum, paid at stipulated times, for stipulated services, measured either by the number of distinct services or by the time of service. A wage-earner must therefore be one who sells his powers, whatever they may be, for the use of another, bringing his own services rather than the products of those services to the best market he can find. In general, he prefers the definite promise of another to the indefinite chances that he may produce what is to be wanted in the future market. Very often he considers the bird in the hand worth any number in the bush, and is satisfied to take a certain living from day to day rather than risk his ability by his own contrivance to meet larger wants. Among the wage-earners we necessarily find all individuals of undeveloped powers of body or mind, dependent upon the rest of the community for both tools and task; also all who render personal services, and most of the laborers of all sorts in every kind of factory.
Profits defined.—Profits may be defined as the indefinite returns for exertion, including all risks, which any manager of his own or others' industry secures by bringing his products into open market. In general the term includes the recompense for any kind of labor, however rendered, if the uncertainty of demand and supply belongs to the one who renders the service. Thus even the fees of a lawyer or a doctor come under the general principles of profits, whenever the conditions of payment in any respect depend upon success. If, on the other hand, such fees are stipulated sums for a stated service, they fall into the rank of wages. That [pg 242] the dividing line between wages and profits is not always clear is shown in comparing payment by the piece in manufacturing clothing, for instance, and payment by the hour for the same kind of work. In the payment by the piece, the stimulant of enterprise borders upon the nature of profits. In payment by the hour, that stimulant is wanting. Yet we are likely to consider the difference as simply a difference in method of estimating wages. Two men ditching side by side may work, one by the day and the other by the rod.
It is possible even to combine the two systems of payment so as to involve both wages and profits. Farm hands in England have been paid a certain price per month, with a share in the profits, measured by the number of cart-loads of grain marketed. Clerks and agents frequently work for stipulated wages, with an added percentage upon the value of sales. Most farmers in estimating the results of a year's labor count their own services, at the price of a hand, as a part of the cost of their products, and distinguish as profits the surplus of product above all expenditures. Thus a farmer may estimate as outgo the interest on capital invested, the wear and tear of machinery, the produce consumed upon the farm, the taxes paid to the government, and the wages to all who labor, including himself and his family. Any return from his products beyond enough to meet these outgoes he will consider profits. These will reward him for extra foresight and contrivance in management and marketing, as well as risk arising from possibility of failure in his plans, destruction of his crop or stock, fluctuations in price, and uncertainty [pg 243] of collection for his sales. Such risks and exertions every independent worker assumes. Usually the exertions are impossible to the inexperienced, and the risks cannot be taken without accumulated capital or a credit established upon well-known character and ability. This fact naturally limits the number of competitors for profits. The effect is clearly illustrated in the difference between an ordinary farm hand and the renter of a farm. Few farmers would encourage the best of their farm hands to take the burden of risks and care implied in renting. The successful farm renter requires abilities and means, gained only by experience and accumulation.
Wages vary with abilities employed.—The variation of wages among different classes of workmen in the same calling is universally recognized as dependent upon the powers employed. The strictly operative labor is usually paid by the hour, day or week, the terms varying with the supposed strength or skill exerted. Executive duties commanding monthly or yearly salaries vary with the total amount of responsibility implied, the large establishment requiring greater abilities than the small one. The strain of responsibility increases in some degree with the number of operative laborers employed, and successful oversight of many hands may be essential to their profitable employment. In that case the salary of the overseer gains something of the nature of profits, since the manager gauges the pay by profits expected. If, as in great stock companies, a manager is hired at a stipulated salary, his personal abilities, as tested by accomplishment, are likely to be the sole [pg 244] gauge of wages. A successful manager of a great enterprise can scarcely be said to have a market price for his services, but will estimate himself in large measure by the profits he might secure as an independent business man. Within limits, such salaries will vary with the experience and inventive ability required.
Supply and demand in wages.—Wages in general are subject as truly to the law of supply and demand as are the products of labor. If few places are vacant and many applicants seek those places, it is impossible to prevent the reduction of wages through the anxiety of some applicants to secure places. On the other hand, if few applicants seek the places open to many, each will find the employer most willing to give an increase of wages for his work. Laws cannot prevent such natural competition, though they may hinder it. Even organization under secret bonds can only temporarily restrain. Human nature is stronger than any arbitrary restriction.
In general, then, wages in any particular occupation may be affected directly by limited competition. Any necessity for peculiar abilities of body or mind, or for preparation by education or training, makes certain, as far as it goes, a limited competition, and therefore the opportunity for higher than ordinary wages. In the same way, if unavoidable hardships or dangers are involved, comparatively few workers will seek such employment and can have larger pay. If, however, the dangers carry with them a stimulating excitement and exhibition of daring, arousing admiration for the worker, this may offset entirely the effect of the danger.
[pg 245]Soldiers and railroad employés for such reasons do not command pay in proportion to the dangers met. Any employment where there are obstacles to natural advancement or where continuance is uncertain does not attract applicants except by higher wages. Illustrations of all these occasions for limited competition are found everywhere.
Stimulants to competition.—If any occupation shows circumstances making entrance easy for new applicants, or if advantages for promotion are readily seen, or if it seems to have a special respectability with the advantage of social privileges, especially if it in some respects seems a work of philanthropy, there will be multitudes ready to engage, and willing to undertake the work at less than average compensation. It is commonly said that these peculiar advantages are a part of the compensation. They operate simply as a stimulant to competition, making more people willing to enter such employment at small wages than would be willing without these special advantages.
A good illustration of such employments is found in common school teaching. While a teacher does need an expensive preparation, and success is dependent upon special adaptability to the work, it is nevertheless true that the work can be taken up readily and as readily laid down; it confers upon the applicant the privilege of social recognition and somewhat of personal dignity; it gives opportunities for some note in the community, and, with all, it is considered a work of philanthropic character, entitling to the gratitude of the public. The result is that teachers everywhere command less of salary or [pg 246] wages in proportion to their abilities than other classes of wage-earners. Fortunately, this stimulant to competition appeals largely to those characteristics of the individual teacher which make him more serviceable in his calling. The opportunity for a life of study, added to other considerations, makes still more effective the competition of earnest, philanthropic students, such as the world needs for teachers.
In the lower ranks of teachers, competition is still more increased by the fact that common school teaching can be temporarily carried on in the intervals of study, without interfering with mental growth. Teaching is also specially adapted for the temporary employment of young men and women not quite ready to enter the actual life work. Acquaintance with human nature, which it fosters, is thought to be good preparation for home and business life. The employments in which women largely engage as wage-earners are chiefly of this temporary character. The fact that the life work of most women must be the making of the home hinders competition in employments where long apprenticeship or special skill of any kind may be demanded. Any temporary employment not only appeals to her sense of capacity for earning wages, but seems better adapted to her future. If that employment at the same time affords opportunity for social life and calls for the natural adornments of youth, the young woman considers wages only a small part of the general consideration, and is satisfied with a bare living. Hence clerkships in stores, subordinate positions as teachers and places as typewriters are crowded with applicants at wages insufficient [pg 247] for a life-time support. Employment in domestic service, which might be supposed more consistent with the larger work of life, is rendered less attractive by the almost entire absence of social privileges and natural opportunities for advancement in knowledge of the world. Girls who would prefer house work, with equal social freedom and the natural stimulant of contact with other young people, compete for lower wages in less satisfactory employment during the years of their girlhood. This is less noticeable in country life, where girls in domestic service become a part of the household and share in the privileges of the young people at home.
Another illustration of the depressing effect upon wages of excessive competition is found in the work of women upon cheap clothing. This work is usually done by the piece in the home, and can be taken up at intervals between household duties. Many women consider earnings of this kind a mere addition of spending money to a somewhat meager support in their home life. It can be carried on without display, and so preserves the dignity of persons who would otherwise shrink from wage earning. The result is a very serious competition, reducing wages below even enough to sustain life and character.
These are only illustrations of what happens in every calling when circumstances stimulate excessive competition. Relief can come only from larger range of satisfactory employment and a clearer distinction in favor of genuine wage-earners and genuine employers among the mass of the people. The customs of society have a much stronger influence upon the life of women in steady employments than upon that of men. A thoroughly [pg 248] enlightened community can do much to enlarge the sphere of such women as are naturally wage-earners, by proper encouragement of their enterprise.
Fluctuation of wages.—Wages in every employment are just as naturally subject to fluctuation under the law of supply and demand as are prices of commodities. Whatever operates to increase the number seeking employment, or to diminish the amount of employment open to competition, reduces the wages. Whatever increases the opportunity for employment, or diminishes the number of persons seeking employment, increases the wages. This is well illustrated in the cost of harvest hands in a year of large crops as compared with a year of small crops. Any financial disturbance, checking the building of railroads and other great enterprises, brings multitudes of would-be farm hands to compete with those who naturally follow farming. On the other hand, the introduction of factories or mining industries has sometimes affected directly the wages of farm hands through a large region by lessening competition.
Upward tendency of wages.—It is certain that the general tendency of wages in all employments is upward rather than downward, in spite of serious disturbances from financial depression often repeated. The gradual increase of welfare among wage-earners is greater even than the increase in money wages. Those who are inclined to join in the cry that the former times were better than these can be answered as they were in Solomon's time, “Thou dost not inquire wisely concerning this.” No doubt the transition from small workshops to large ones and from small factories to great combinations [pg 249] has caused friction in adjustment to the new conditions. Many are now wage-earners who were once profit-gainers. But with the improvements in association and a clearer understanding of abilities and needs, each worker becomes a stronger factor than ever before in bringing about a fair competition and a satisfactory compensation.
There are still new difficulties in every change of method. The influence of custom often retards freedom of movement, makes more slow the natural rise of wages, and hinders a gradual adjustment to new conditions. In many cases it prevents individual enterprise among wage-earners, and crowds from the higher ranks into competition with the lower because of no natural outlet for ambition. Even laws intended to protect laborers sometimes operate against them. Thus a law restricting the terms of contract between workmen and their employer has sometimes prevented the employer from investing capital in a business which otherwise would have increased the opportunity for labor, and so would have actually increased wages.
The effect of free schools upon ability to earn is generally recognized. The best estimates place the increase resulting from common school education at fully 25 per cent. Some of the best establishments are limiting their offers of employment to young people who have had the advantage of even high school training. This more general education tends in two ways to increase the compensation of wage-earners: first, by giving a clear knowledge of abilities that makes competition fairer; and second, by increasing the general effectiveness [pg 250] of all production, which enlarges the sum to be divided.
Every movement toward greater social freedom and uniformity of opportunity contributes to the same end. Next to slavery, social caste is the chief obstacle to free and fair competition of laborers. Any barriers of race, social organizations, or even churches, which cultivate exclusiveness in any direction, in the end work hardship. If they bring temporary advantage to a few, they are sure to hamper the freedom of many. The welfare of the community is surest when social conditions favor the freest communication in all ranges of employment, whether in wage-earning or in profit-making.
The cheapening of transportation in recent years, bringing all the world nearer, has had various effects upon wages. It has destroyed, to a considerable extent, the inequality of wages between different regions of country. If laborers of any kind are scarce, a telegram will within a few hours bring numbers from some place where they are too plenty. The result is a tendency to greater uniformity throughout the world. As yet the full effects of this progress are not realized. Some hardships will undoubtedly be endured from the ready introduction of unskilled laborers from crowded countries into our less densely peopled country. But with a larger range of production opened by cheap labor, our better workmen will find more constant and more remunerative employment. If restrictions upon immigration are necessary, it must be to prevent too sudden a transition, hindering adjustment to new conditions. The danger of overcrowded population comes [pg 251] more certainly to the nation excluding itself from the great world by excluding the rest of the world from itself.
The general effect of improved machinery has been several times referred to already. Its advantages come to the wage-earner directly in multiplying employments and in multiplying the demand by cheapening products. Indirectly, the benefits are still greater, because these cheaper products form the bulk of living for the workers. It is probable that even the better living thus provided has raised the efficiency of labor so as to command better wages. It is certain that every movement of civilization which gives a clearer knowledge of human nature and the world about us adds to the power of every man, whatever his work. We may welcome every element of progress in this enlightenment as a direct help to the portion of humanity recognized as wage-earners. The better the masses of people understand each other the better each understands himself; and that understanding is the best protection against oppression of circumstances or of men.
Variation in profits.—Profits in various pursuits, like wages, are affected by limited competition. The need of special abilities and experience in any particular undertaking keeps back the timid from that enterprise, and the accumulation of experience of a peculiar kind hinders one from turning to other occupations. Even if a young man is willing to take the risk of inexperience as a manager, he can seldom gain the confidence of those who control capital. Hence competition in new and untried enterprises is slight, and [pg 252] profits are often great. Other undertakings are of such a nature as to involve great uncertainty. The risk of failure retards the cautious, and so the most enterprising win great returns. In estimating such returns, we overlook the failures and count only the great successes. Sometimes accidental opportunities open to the few a limited range of enormous profits. Legislation fostering monopoly sometimes favors such opportunities. These are usually temporary, and such advantage cannot long be maintained under the most fortunate conditions. Secret methods have sometimes controlled the market for individuals with enormous gain, and in a few instances a nation has maintained such secrecy with apparent success. But these, too, quickly yield before competing enterprise, since wage-earners under such employers must share to some extent the secret, and will have the stimulant of enormous profits to use the secret for themselves.
Profits in competition.—Profits are themselves a stimulant to competition, and competition in every pursuit tends to reduce the profits. If any circumstance apparently insures more than average profits in any undertaking, competition becomes excessive and profits vanish. The promise of a tariff on wool leads farmers to expect an advance in the profits of sheep raising. Competition begins in the purchase of flocks, by which the profits of those already in the business are greatly increased. Competition continues by multiplication in the flocks until sellers of sheep are more plenty than buyers. Thus, the stimulant to competition has operated to lessen profits in the end. A famous sheep [pg 253] raiser in New York, when asked to give a maxim for success in the business, answered, “Buy when your neighbors sell, and sell when your neighbors buy.”
Similar experience has been noted in various pursuits. The tendency, however, with wider knowledge of others' wants and efforts is toward a greater uniformity of profits. Modern methods of production and clearer perception of ways and means make it easier for competition to have its full effect between different kinds of business, as well as in the same business. The more we know of our neighbor's work through the daily press and extensive travel, the fairer is the opportunity for competition to act. This tendency brings hardship to the weaker portion of managers engaged in any particular business. This makes the power of so-called trusts and great combinations apparently harmful. In the end, however, the result is more constant profits, though smaller, and the advantage of the whole community in a more stable business. It is even conceivable that the stimulant of fair profits may finally reach a larger proportion of the community through interest in the great establishments than in the past from the unequal and uncertain returns of independent managers.
Even among professional men, whose fees for services have somewhat the nature of profits, the same law of competition, dependent upon supply and demand, holds sway. The compensation of an author for his publications, though protected by copyright, is dependent upon conditions limiting competition or stimulating it. It is customary for surgeons, physicians and dentists to make a fee proportional to the demand for their services. [pg 254] Thus the skilled dentist, who is wanted by ten times as many people as he can serve, raises his price till the demand is limited to meet his strength. This enables younger men at smaller prices to gain the opportunity to establish like reputations by doing equally good work.
Profits in agriculture.—The profits in agriculture are subject to the same laws. Many influences operate in both directions. The limitation of land fit for agricultural purposes has a tendency in itself to increase the profits of land-holders, under the principle of monopoly, though its chief effect is on land values. The increasing wealth of the world, and the greatly increased wants of the civilized community, multiplying manufactures, limit competitors more and more. The relative number of farmers in our country is gradually diminishing, while the demand for food is actually increasing beyond the increase in population. Men are predicting every year a scarcity price for wheat,—unwisely, probably,—through the limited range of possibilities in wheat raising. The introduction of labor-saving machinery enables enterprising farmers to greatly increase their product for the same number of acres, and still further to increase the range of management so as to make larger farms a possibility. The rapid advance of means of transportation has so widened the range of competition as to make the farmer in one part of the world compete with the farmers of every other part. The staple products, especially wheat, being so easily adapted to new countries, are constantly liable to over-production. At the same time the effects of a bad season in any particular region, while reducing the crop, are not [pg 255] likely to advance the price to the same extent as formerly. The opening of vast regions once considered deserts to a rapid settlement by farmers for the sake of the profits in land speculation has again and again wrought changes in the entire business of agriculture. Similar effects may be expected still with the development of South America, South Africa and Siberia.
All these facts tend now to make the profits in agriculture decline, and the fact that farm life has certain attractions in establishing permanent homes for families and life-time associations, contributes to this tendency by holding people to their place as farmers for at least a generation. The possibility of independent enterprise, even with small profit, and the freedom of family life from interference of neighbors make large numbers of farmers willing to continue their business in spite of the reduced earnings.
Fluctuation in profits.—It is proper to call attention to the rapid effects of any change in market upon the profits of any enterprise. Wages are in large measure an anticipation of profits, and so far as they are affected by changes in market prices, it is largely through estimates upon averages. Custom has much to do with wages demanded and paid, but profits are fluctuating constantly with the fluctuation of prices, with every change of methods affecting competition, with every introduction of improved machinery and with every accident of fortune.
No better illustration of this fact can be given than is familiar to every farmer in comparison of results from the work of different seasons. With the same outgo for [pg 256] labor he may find the profits of two successive years wide apart. One year has granted the fortune of good crops with fair prices, while the other has yielded him a half crop when the prices of his product in the world are low. Possibly the improved machinery in wheat raising, applicable to the great farms of Minnesota, Dakota and California, has caused him to bring a costly product into close competition with a cheap one. Possibly, too, he has been tempted to excessive use of labor-saving machinery himself at too great cost for the transition, and it is more than probable that, stimulated by the high price of oats last year, he, with thousands of his neighbors, has made an extra crop of oats this year, to the actual destruction of the market. In all these cases the farmer himself suffers directly, while his hired hand is affected only indirectly by the unwillingness of farmers in some seasons to employ as much labor.
Profits offset by losses.—The actual profits in any enterprise are often overestimated by our failing to notice that all the waste of unthrifty undertakings comes practically out of the profits of the more thrifty. Wage-earners as a class are protected against losses by frequent settlements and by public sentiment. The losses of the unthrifty managers come out of the accumulations of previous thrift, or else are borne by the thrifty men who have trusted them. The bulk of bad debts in failure of any enterprise is for materials, machinery, etc., furnished by other producers. In great financial depression, the profit-makers bear the evil directly, while the wage-earners feel the effects in the lessened competition for their service.
The nature of the conflict.—The mutual interest of all whose energies are used in production, that the total product of wealth should be as great as possible, is often disturbed by doubt as to the fair division of what is produced. Under the modern factory system, the multitude sustain the relation of employés to a comparatively few employers. Antipathies are liable at any time to arise between these two classes of workers. Those who officially control wealth in great enterprises are subject to suspicion of unfair treatment of their less independent employés. Ignorance among the mass of laborers of the intricacies of business life contributes to such suspicion. In fact, the so-called conflict of capital and labor is a struggle for and against profits. Interest and rent are only indirectly involved in the question. The manager's profits may be assumed by both manager and wage-earners to arise from reduction of wages. The necessary reticence of business managers and the frequent arbitrary decisions as to wages help the wage-earner to feel that his interests conflict with those of his employer.
It is well for all to realize that this conflict, when [pg 258] there is one, is not so much between the rich and the poor as between the struggler for profits and the struggler for wages. In many instances the true solution lies in the same direction, if both could see the facts alike. It is an acknowledged fact that generous wages make enlightened, energetic laborers, and that greater profits come in the long series of undertakings from the most intelligent service. A farm-hand at $20 a month is sometimes worth more than two at $15. On the other hand, if markets are low and profits decline, permanence of employment will depend upon a readiness of wage-earners to accept a new adjustment of wages to conditions. Everything which fosters a better understanding between profit-makers and wage-earners contributes to the welfare of both. Everything which hinders such understanding injures the welfare of both. The cost of such friction is borne by both parties. But in the long run, the wage-earners are liable to carry the larger part. Even the destruction of property by rust, decay, or even violence, comes back upon the wage-earners who might have been employed in its use, quite as truly as upon the manager whose profits and accumulations are wasted.
Obstacles to fair understanding.—The necessary ills connected with advancing civilization, in the laying aside of old methods for new, in the adoption of extensive machinery, and in the more perfect competition with the world, fall upon both profit-maker and wage-earner. The wage-earner feels the immediate loss of his usual opportunities. The profit-maker feels the weight of providing new machinery, devising new methods and taking the longer range of chances. All these ills are [pg 259] met in time by intelligent and hopeful struggles for the best. In the worst conditions ever brought by improved machinery, a very few years have brought relief and improvement to the very class of laborers injured.
The danger is that wholesome competition upon a clear basis of fair understanding and free range of enterprise may be checked by legislation or organization for class purposes. Against the interests of the mass of the people are all extended franchises, giving arbitrary control for long periods of years over any industry; monopolies sustained by patent rights or protective duties; trusts, so far as they imply a combination of men to resist the law of supply and demand; and laws which in any way favor one class of people engaged in one kind of industry as opposed to any or every other.
Quite as prominent are those hindrances which come from every kind of fraud, including adulteration and misrepresentation of products, deception as to market conditions, false credit, and violence of every kind. The more perfect the light thrown upon all the conditions of production, the better the understanding which all men may have of a neighbor's welfare, and the easier it is to put ourselves in our neighbor's place.
Strikes.—The methods of warfare between wage-earners and profit-makers are quite generally understood under the names of strikes, boycotts and lockouts. The occasion for a strike, which means a sudden stopping of work by the employés of an establishment, is usually some question of immediate advantage to the workmen. A desire for increased wages, fewer or different hours of labor, or the removal of some restriction upon habits or [pg 260] associations, gradually becomes general, and through some permanent or temporary organization united action is taken. Quite frequently a strike is occasioned by a sudden and apparently arbitrary reduction of wages, affecting a large body of men. Many strikes are inaugurated in the interests of discharged workmen, when the organization to which they belong is supposed to be interested.
Thus a strike is always a form of warfare, and should be entered upon only after the same careful consideration that makes war sometimes a necessity. Under ordinary circumstances and upon general principles, no body of workmen has any more right to suddenly stop work without notice than railway managers have to stop a daily milk train. The end to be secured must be important enough to humanity to overbalance the injury of the strike itself.
Since a strike is an effort to produce a corner in the labor market, it will succeed in the end sought only when conditions for cornering the market are favorable. Even then the loss to the entire community is considerable. The injury to property, while directly borne by the profit-makers, is widely distributed. First, all wages stop and wage-earners suffer. Second, ability to pay debts ceases and capital owners suffer. Third, insurance companies have their risks increased and all insurers suffer. Fourth, the market for the products is demoralized and all consumers suffer. Fifth, almost always social disorder results, police expenses are greatly increased, and all taxpayers suffer. Sixth, in the end the relation between employers and employed is more [pg 261] strained and less free than before, so that all humanity suffers.
The chances of success, as indicated by the record of many years, are small, and apparent successes are often temporary. And yet the world recognizes the right of a body of laborers to strike, just as it recognizes the right of revolution to secure the general welfare. Formerly a combination of workmen in a strike was treated as a conspiracy and punished as such. Now the general rule is absolute freedom of combination with rigorous repression of fraud and violence. This enables any body of men to make a serious test of the conditions of a labor market, at the risk, primarily, of their own welfare, but with serious strain upon the general good. It leaves room for the possible breaking down of old customs, which are stronger than law, and it sometimes proves, like a war for liberty, a means of great enlightenment to those who take part in it. It is properly held as the last resort in the struggle for fair recognition of the rights and necessities of wage-earners.
It is noticeable that the tendency to strikes among the more skilled workmen is diminishing, and that the mass of communities are weighing their own interests more carefully as they see the general destructiveness of the method. At present strikes are expected among laborers of least skill, where they are, from usual conditions, least effective. Strikes are frequent among coal miners, where wages are liable to reach the lowest possible mark because of the ease of competition from all parts of the world, though the effect of such strikes [pg 262] in bettering the condition of miners has scarcely been felt. The fact that destruction of property and the natural waste from strikes is so widely distributed among workmen and consumers retards popular sympathy, and the fact that strikes increase the risk of capital employed, and actually reduce the amount of capital in use, diminishes the chance of increasing wages or comfort in those employments where they are likely to occur. It seems evident that some better remedy for oppressive conditions of wage-earners must take the place of strikes.
The boycott.—The boycott is a comparatively recent device for enlarging the field of combat to include not only the employés of an establishment but the consumers of its products. This is especially applicable to those industries the products of which are largely consumed by wage-earners, whose sympathies can be depended upon to carry it out. It asks all sympathizers to refuse to purchase products from the employer or firm attacked. A great bakery, for instance, can easily be ruined by a boycott, if its customers are chiefly wage-earners. It is easily applied in cases where custom has allowed the use of a label from some organization of workers. It has been attempted with some success against a railroad so related to other roads as to require the services of sympathizers with its striking employés to carry its freight to final destination. An instance of its widest application is in an effort to persuade the people of a city to refuse to patronize the street-car system.
The warlike nature of this method is apparent in [pg 263] the effort to use terror as one means of persuasion. In this case it uniformly overreaches itself in destroying public sympathy with the strikers. That it has a possible place in the struggle of wage-earners for their rights cannot be disputed, since it corresponds with the nature of a blockade or a siege in other warfare. But its nature as a method of warfare is equally clear, and its use in the interests of humanity belongs, with all war, as a last resort.
The lockout.—Lockout is a name given to a method employed by managers to prevent the continuance of a strike by aid of the sympathy of employés not directly interested. It often happens that a comparatively small body of workmen in a great factory strike for higher wages, and are sustained in their strike by the sympathy and support of other workmen in the same factory. Under these conditions the employer is tempted to stop all work by a sudden closing of all shops, that the pressure of suffering among a large body of wage-earners may force the smaller body to accept the old conditions. The lockout seldom gains a popular sympathy, for the reason that employers appear to be using this method of warfare from a superior position of power. And yet no one can dispute the general right of employers to control of their business. Such a sudden stopping of business without an attack by a strike or some similar provocation would be considered inhuman, and popular sympathy would be wholly with the laborers and consumers interested.
General evils of such conflicts.—The incidental effects of such violent opposition between profit-makers [pg 264] and wage-earners are certainly detrimental to all interests. The great multitude of farmers throughout the country depend for welfare upon the body of people using farm products, and all the waste of power from enforced idleness of wage-earners, managers and machinery is shared by farmers through diminished power of the rest of the world as consumers. In only a few instances have strikes affected agriculture directly, partly because the relations of employer and employed are so largely personal; partly because the supply of agricultural laborers for the season is usually large; but chiefly because wage-earners upon farms in this country expect eventually to become themselves proprietors, and so no separate organization is probable. In some countries, however, where wage-earners in farming communities are a class by themselves, a strike has been the only method by which the barrier of custom and law, built up through many generations, could be broken. The great agricultural strike in England will always be remembered as having elevated the standard of labor and living in that country. It is to the interest of all farmers to cultivate a better understanding between employers and employed than can be maintained with any general expectation of strikes, boycotts, lockouts or similar warlike methods of settling fair wages.
Trades' unions.—The organizations known as trades' unions, in which the wage-earners in any particular kind of business unite for self-protection, have had a gradually widening influence upon the relation of managers to employés. Once they were characterized as “machinery by which 10 per cent of the working classes [pg 265] combine to rob 90 per cent,” because the advantage secured usually comes out of the consumers of products. But today reasonable doubts of the general advantage of a well-managed trades' union have disappeared. If once they seemed a conspiracy against society in general, they are now recognized as a part of the general progress in mutual recognition of rights and privileges. It seems right to expect from them still larger usefulness, with a clearer perception of their importance. It is evident that they contribute somewhat to general intelligence of their members, and so far as this is true they help toward greater efficiency. At the same time they help to maintain stability of employment and stability of other conditions surrounding labor.
A brief enumeration of ends they may serve directly will help to appreciate their importance. First, they can as truly estimate the market value of wages by gathering statistics from all parts of the country and from other countries as can any organization in commerce estimate the market value of produce. Second, they can serve as an employment bureau in furnishing information of places where work is wanted, thus equalizing the advantages as well as the burdens of their associates. Third, they can make more uniform and more satisfactory the customs in regard to the length of a day's work or privileges of any kind associated with the work as perquisites. Fourth, they can, if they will, find the true gradation of skill and of wages among workmen, so as to establish a natural line of advancement. Fifth, they rightly do, and can still further, serve for mutual support in cases of illness, and for protection [pg 266] of a community against fraud in pleas of poverty. Sixth, they may easily and properly, if they will, provide for insurance of character, both as men and as workmen, by issuing certificates, and under proper provision giving bonds, such as are required in many positions of trust. Seventh, they may extend their operations even to the taking of jobs that require a variety of work continuing through a period of time. Eighth, they can, under most favorable circumstances, undertake various stock enterprises, especially coöperative stores, thus securing an incentive to saving, and diminishing the spirit of antagonism against the profit-makers. Finally, though they have the best possible organization for a successful strike, if necessary, they can subordinate this disposition toward warfare to a broader machinery for fair consideration of all interests and for individual arbitration of rights.
Such organizations, under good management, win the respect of all, and find a recognition of their methods satisfactory. Farmers' clubs and granges, though far from reaching ideal efficiency, furnish suggestions of the general utility. Unfortunately, these organizations, having little if any basis of capital, have seldom been incorporated under the laws of the state. Could the powers and purposes of such organizations be established upon a basis of statute law, the range of their usefulness might be greatly increased. They might even sustain a method for enforcing in the courts the collection of wages, where the single wage-earner often accepts the half loaf in a compromise rather than meet the expense and loss of time involved in a law suit. [pg 267] Certainly the establishment of legal relations between the trades' union and the state would give to it a character and stability most likely to promote all interests.
Federations of labor.—The so-called federations of labor, in which practically the only bond of union between individuals is the fact that all are wage-earners, have so far worked out but a small part of the problem involved in their existence. They have the advantage of uniting large numbers and a variety of interests; but they have the disadvantage of subordinating all other interests to the supposed conflict between employers and employed. Their tendency is almost certain toward lowering standards of efficiency, and attempting by class legislation to get the advantage of mere numbers.
It is almost impossible that the organization shall be kept out of the field of bargains in politics and contrivance for special legislation, demoralizing to the whole country. Too often the votes of members are made a bribe for securing certain favors. In the nature of the case, they sustain a body of officers whose chief business is in danger of becoming that of either political agitators or political bosses. The machinery of organization is liable to reduce the independence of individuals. The organization itself is liable to demand a personal subordination almost equivalent to military rule, and the badge of the society may mark a man as under direction of authority. Even in questions where the majority rule, the force of the federation requires the caucus principle of absolute adherence, even though the majority represents the weakest and least intelligent [pg 268] part of the organization. The demoralizing effect of such methods, including wholesale trading of opinions, is liable to debase citizenship, and so to diminish the individual self-respect, which is the highest possible protection for laborers.
Courts of arbitration.—Arbitration between employers and employed, in cases of serious misunderstanding, has long been advocated as a wise means of settling differences. The obstacles to its general, voluntary adoption are considerable. Employers object because it involves the admission of an outsider as a judge of their business methods. The employés object because they fear the sympathy of arbitrators with the superior intelligence, wealth and power of employers. Yet there seems no good reason why a representative body of men, chosen for character and ability, should not be appealed to by both parties in a contest which has already broken up the natural relations of business. As has been shown, the whole community suffers in every interruption of production and trade, and so far the community has the right, and should have the legal privilege, of insisting upon the fairest and quickest means of settling the controversy. In far less important difficulties between individuals, society insists that either individual shall have the right to bring the other into court.
Society is waiting only to settle the best form of a court of arbitration for labor difficulties. The trend of popular judgment is in favor of a well-organized commission, having the dignity if not the authority of a supreme court. That such commissions have not generally [pg 269] come up to the ideal is due largely to political influence among leaders of organizations, so that the commissioners become the choice of a faction rather than of the people. It is conceivable that the functions of judges in a series of state courts may be so enlarged under carefully framed laws as to include the duty of arbitration in labor contests.
If the people are not yet ready for compulsory settlement of such questions, the time is surely coming, under the enormous aggregation of industries and the immense combination of employés, when the judgment of the people expressed in due form of law will control both employer and employé. The whole world is recognizing methods of arbitration as better than warfare. It will soon insist that these minor wars within the commonwealth shall cease.
Profit-sharing.—Some general system of preventing antipathy between profit-makers and wage-earners seems desirable. Certain interests are known to be mutual, and both employers and employed welcome any system by which those mutual interests can further the success of the business. Among the methods proposed, and sometimes successfully employed, the most prominent is profit-sharing. This implies on the part of employers after payment of current wages a distribution, at stated times, far enough apart to secure a fair average in the profit and loss account, of some portion of net profits among all the wage-earners. The per cent of net profits to be thus distributed is matter of agreement, and the basis of distribution is naturally the scale of wages accepted by the employés in their contract [pg 270] for employment. The particular methods of applying these principles vary with circumstances, but in all cases depend upon the actual confidence of employés in their employers. The effects seem to be good, bad or indifferent, in proportion to the general intelligence and stability of the employés. With really skilled workmen, established in homes and feeling responsibility as citizens, profit-sharing stimulates to the highest energy. With weak and irresponsible wage-earners it is likely to bring waste and sometimes false notions in regard to wealth production.
The weakness of the whole system is the lack of provision for fairly sharing burdens in the constantly recurring periods of loss. If the employé's share of the profits is consumed upon comfort or luxury, he is even less prepared than without such profits to meet the loss of not only profits, but his wages, in times of depression. If these additional earnings shared as profits become an insurance to the wage-earner, a sort of reserve for sustenance and safety in the necessary times of weakness in any industry, they stimulate the best characteristics of saving and character-building, and cultivate a disposition to meet all emergencies in patience. It is quite customary, therefore, in any system of profit-sharing to provide also an investment for the employés in a reserve fund, from which the necessities of the business and the needs of the whole community of workers may be met. Such a method, if wisely managed, makes the interests of the employés coincide with those of the employer. If added to this there is ample opportunity for suggestions as to enlargement and improvement [pg 271] of the business in all minutiæ, the best abilities of the workmen are called out and the heartiest sympathy is possible. There still remains against such a system the objections, that losses are not shared as truly as profits, and that employés are liable to require too intimate an acquaintance with the condition of their employer's business to foster the success of the enterprise. Its successful application is so far confined to lines of business easily comprehended and direct in their methods.
Sliding scales of wages.—Another device for connecting directly with the fluctuations of business any compensation of wage-earners is called the sliding scale of wages. This is an attempt to make each sharer in production depend directly upon the price of products in the market for rate of wages. The wages of different workers are adjusted to each other by contract upon some ratio established by experience, and then the wages of each are made to vary from month to month with the average price of the finished product in the general market. This subjects all parties directly to the fluctuations of the business in both profit and loss. Its success is dependent upon the confidence placed by employés in the fairness of the adjustment. It stimulates to highest productiveness when prices are high, and checks production slightly when prices are low. But it provides no direct method for readjusting business under the pressure of great changes in methods of management, nor does it save from strong antipathy against the improvement of a business by labor-saving machinery. Its successful employment depends in general [pg 272] upon the character and efficiency of employers and the general intelligence and enterprise of employés.
Coöperative industry.—Coöperative industries are sometimes advocated as a complete solution of labor difficulties. The system implies a union of independent workmen, all of whom shall be sharers in the capital employed as well as in the labor involved, including management. The management of the enterprise is entrusted to chosen members of the coöperative force, and wages or salaries are fixed according to abilities employed, essentially upon the scale of current wages outside the coöperative enterprise. All profits are then shared among all members of the association in proportion to their wages. But an investment of such profits in the growth of the business is an essential part of the plan.
This method satisfies the ideal of equity in division of wealth produced, provided the basis of adjustment between classes of wage-earners is accepted as fair. The principal difficulty in this respect arises in reference to the salary of managers and overseers. Such salaries are less clearly defined in the labor market, being usually complicated with profit-making, and are liable to be considered out of all proportion with the wages of other workers. If underestimated, the marked abilities required in management are likely to be withdrawn from the enterprise for independent management in profit-making.
The chief difficulties, however, with coöperative production grow from the want of confidence of the multitude of shareholders in their managers. Few kinds of [pg 273] business can be carried on successfully under a body of absolute rules, and fewer still will bear the delays and hesitation required for a general consultation of many authorities. The comparatively few instances of genuine success in coöperative production are due, in the first place, to the comparative simplicity of the undertaking; and, in the second place, to the genius of some organizer, who has been willing to contribute his superior abilities for the sake of the enterprise itself rather than the compensation.
A few principles may be fairly drawn from the general experience. First, all shareholders must be actual workers, in some way responsible for a part of the production. Second, the influence of each shareholder must in some way be held in direct ratio to his share in the production. Third, the system of accounts must be such as all can fairly understand. Fourth, the management must be entrusted to a chosen few, whose interests are chiefly in the business itself, whose character secures the confidence of all, and whose administrative ability is not too much hampered by rules.
The opportunity for coöperative industry is nowhere greater than in a community of farmers. Butter and cheese factories, cold storage plants and milk stations invite the coöperation of interested farmers upon the simplest possible basis of agreement. The multiplication of such enterprises is desirable, and the farmers of every community may profitably study the conditions of success. The greatest obstacle heretofore, has been the want of competent management, and the distrust aroused and maintained by the inefficiency [pg 274] and fraud of managers. It is possible, too, that farmers generally do not recognize the actual importance of executive abilities, and are unwilling to pay the salary actually earned by a thoroughly competent man.
Legal restrictions as to labor.—It is natural for those who suffer in the struggle for better wages to seek the support of law in restrictions upon contracts as to wages, hours of employment and conditions of comfort. The principle that governments must protect the weak against the strong in any community is a thoroughly established one. Yet its applications are subject to continual readjustment. Multitudes of experiments have been tried, affecting the whole range of inequalities in wages and perquisites. In many instances, wages have been fixed by law, and that for long periods of time, but without relieving in any respect the actual force of competition among wage-earners themselves. Indeed, the tendency of very explicit enactments is to weaken the individual ability of wage-earners by destroying ambition. Wages fixed by law are necessarily as low as the average would be in a free competition; otherwise production is hindered and capital is diminished. With this low average any worker of more than average ability gains nothing by exerting his ability, but does gain ease by neglect. Thus enforced uniformity reduces the energy of the producing forces and practically closes the doors of advancement from wage-earning to profit-making.
A similar effect is found in efforts to regulate the hours of labor by law, except where the law simply defines the meaning of a day's work or emphasizes the importance [pg 275] of public health and vitality rather than equality in distribution. Humanity has done much in reducing hours of toil, and may yet do more; but it will be for humanity's welfare in larger considerations than are measured by money. The eight-hour question, so constantly agitated in certain callings, concerns the entire people just so far,—and no farther,—as the general health and energy of the community depend upon it. Farming communities stand aloof from its application; and yet there is no question that the farmer's home might be even better than it is for developing physical and mental vigor, if hours of toil were more carefully restricted to meet the conditions of healthful growth and activity.
Other conditions, affecting the employment of children and women, are proper subjects of restriction by law; for these also involve the consideration of general welfare in the elevation of the physical, mental and moral characteristics of the race. Upon the same plane must be put all legal restrictions upon methods and machinery, reducing the dangers from accident and promoting the comfort of employés. All restrictions serve their purpose only so long as they are appreciated as having their reason for existence in general welfare. The rights of an employer, under contract with his employé, like the rights of a parent in control of his child, are subject to the law of good will; and the world will yet find a way to make its restrictions felt wherever recklessness or carelessness or greed destroys good will.
Nationalization of industry.—A somewhat popular [pg 276] suggestion in solution of labor difficulties is the so-called nationalization of industry. This, in general terms, is a proposition to equalize compensation and avoid fluctuation in both wages and employment by public control of all industries under official management. While this involves some principles of socialism, more properly discussed in connection with consumption of wealth, its relations to productive industry may be briefly presented here. The plans proposed are as yet expressed only in most general terms. Even the method of bringing about such a revolution of thought, feeling and action has not been devised. Still less ready is anyone to point out the details of a plan for the actual production. The nearest associated ideas are found in governmental services through a post office department or the management of a system of transportation. Most advocates of the method overlook the fact that in such government administration of partial industries the law of competition is still operative between these enterprises and the universal industry of the people.
The difficulties in governmental management under present conditions are anything but small, especially under popular rule, where the dominion of party and the influence of position are all-powerful. Under monarchial rule the organization of such industries becomes like that of an army, in which arbitrary power predominates. It seems easy to see that any effort to solve the problems of labor employment by national control involves finally the arbitrary decision of power, in adjustment of both duties and compensation. The management by officials, however those officials are appointed, [pg 277] is not necessarily wiser, more efficient or more benevolent than the management by interested men, whose life is in natural contact, through business relations, with employés. Those who have had experience with official control under popular government are not likely to expect a readjustment of all interests from the standpoint of politicians to be marked by either universal good will or universal common sense. It is reasonable to suppose that wherever general welfare in actual use of wealth can be best promoted by public control, such control will come through the free exercise of individual judgment with reference to the work in hand. While there ought to be no objection on the part of any to a government enterprise which can be shown to serve in that way the greatest good of all, nobody ought to assume that the nationalization of industries is for the greatest good. Each great undertaking will require its own proof, not only of the welfare to be expected, but of the practical means by which that end can be secured.
The spirit of equity chief.—The trend of experience goes to show that true economic interests, not only of the community but of individuals, are in accord with general principles of welfare. It seems certain that communities paying the highest wages are those which gain the highest return for labor in product, and maintain the highest general rates of profit. In general, also, those enterprises which are controlled with most care for equity in wages and for the general welfare of employés are most stable under fluctuations of business and most genuinely successful. While wealth may be [pg 278] accumulated unjustly in the hands of those who oppress their neighbors, there can be no doubt that in long periods of time the best adjustment of all interests gives not only the truest welfare but the largest wealth and the best use of it. The spirit of equity must eventually control both managers and wage-earners, and no other disposition can furnish a final solution of the problems of distribution between employers and employed. If employers are greedy, the wrong will not be righted by an equal display of greed on the part of wage-earners. The spirit of true philanthropy is the only proper spirit for discussion of these questions.