Economy of minute division.—The advantages, limits and disadvantages of minute division of labor are worthy of a more careful discussion, since they bear upon every kind of enterprise and all classes of labor. A large part of the century's progress in manufacture, and especially the development of machinery in production, has grown out of the extension of this principle of division. An analysis of the particulars by which great saving is made in the cost of production will help us not only to understand the facts better, but to extend the principle in various directions. In the outset it implies the united effort of several workmen in succession and in close combination upon a single product. It is said that a pocket knife, which we buy for fifty cents, has involved in its manufacture the services of seventy-two different persons, doing different things. The perfection of its finish depends upon the perfection of each of these persons in his single act. The cheapness depends upon the readiness with which each act is performed, and the utility of every kind of power employed.
A good illustration of division of labor may be found in the process of butchering hogs in a large packing house. The live hogs enter the building in the upper [pg 181] story, while able to carry themselves on their own feet. Their weight then moves them easily on through all the stages of the process. Two men catch the hogs by hooking a short chain about the hind leg and slipping it into the notch of an endless chain power, which hoists them to the carrier, a continuous track upon which a roller attached to the chain may easily move. A single man wields the knife which sticks the hogs. Two men are sufficient to manage the scalding trough. One directs the machine through which the body of each hog is jerked to remove by brushes the mass of hair. Four, perhaps, may handle scrapers as the hogs are dropped upon a platform, and six more may use the shaving knives by which every particle of hair is removed. Two are needed with different tools for beheading; and one makes place for the gambrel. Two remove the feet at opposite ends, three with different implements are needed in removing entrails, two are required to halve the body, while another gives it the final washing. The result is that each hog has passed from the pen to the cooling room in less than ten minutes, and the hogs pass under the hands of these several men at the rate of eight a minute. Each man uses but one tool in one particular spot, and repeats that single act constantly. By a similar division of labor eighteen men are employed in skinning a single beef, a different knife being used for each particular part of the body, and all pass in regular routine over the ten or twelve beeves undergoing the operation. The rapidity of this motion can scarcely be conceived by one who has witnessed simply the butchering upon a farm. All this is due to a minute division [pg 182] of labor into as many tasks as there are different operations, each man having, if possible, but one distinct kind of motion. The saving is not only shown in the increased quantity of work, but in the uniform quality as well. All the workmanship is essentially perfect. These advantages appear more strikingly in the manufacturing arts, where the so-called factory system has brought division of labor to perfection.
A brief analysis of the advantages, limitations and disadvantages is worth our study, because of their possible application to farm industry. So far they have been felt chiefly in contributory manufactures of farm machinery, facilities for transportation, with all attending manufacture, and the factories consuming raw materials furnished from the farms. They apply equally well where division of labor is profitable in farm operations.
Extra efficiency of labor.—Most obvious advantage is seen in the saving of the time of a laborer, both in learning the essential parts of his work, so that apprenticeship is shortened to one-tenth or one-twentieth of the time required for a full trade, and in the far greater dexterity with which he works without change of tools or change of location or distraction of attention. Thus a raw hand in the course of a few months performs his single task more rapidly and more perfectly than an expert workman who must know and practice all the parts of the business. While such a hand can scarcely be called skilled in a technical sense, in the narrow application of skill to one action he may be more perfect than any skilled workman. The fact that each man's work passes immediately under the inspection of [pg 183] another, whose motion must exactly correspond in time and adjustment, makes any costly oversight in the shape of executive labor very much less, since every step in the process tests every other step. It is also found that minute attention to a single detail tends toward the highest improvement by invention of every tool and machine employed.
While this system is not likely to foster the inventive spirit which brings out entirely new principles in machinery, because the work grows easy by familiarity, it does make the workmen quick to invent the little devices that perfect such machines. A broader culture and more general training discovers the difficulties and devises the entirely new method: the worker hits upon improvements. Watt invented the steam engine, but a lazy boy employed to move the valve hit upon the automatic movement.
Increased efficiency of capital.—The efficiency of capital in production is greatly increased by minute division of labor. The shop room required for each man is reduced to the minimum space for himself and his material. His tools, while the most perfect possible, are the fewest possible.
The machinery and motive power are used to their utmost capacity constantly, and the economy of larger engines and machines is well known. Possibly one-fifth of the power required to move all the machines used by ten men working as independent tradesmen would provide better motion, more constant and cheaper, for the ten working together under division of labor. The waste in starting and stopping of machinery is almost [pg 184] entirely avoided, and the condition of the machine for doing its work well is kept up to the best. A most important saving is in diminution of waste. The shortened apprenticeship and the superior dexterity make waste from blunders almost nothing. Still more noticeable is the saving from any waste of superior abilities, either strength or judgment, upon actions requiring little ability.
Under minute division of labor a strong man is kept where he is needed and the child may serve where his powers are sufficient. The efficiency of women is recognized wherever applicable, and all the workers have their full abilities made constantly useful. Moreover, the circulating capital represented in the raw materials is kept in use much less time than under the less effective system. Since any article of manufacture passes through all the operations upon it in very much less time, the interest upon capital employed in holding the material and in supporting the labor during its changes is indefinitely less. The quicker returns from this more rapid manufacture are everywhere recognized.
Limits of division.—With all its advantages, division of labor is limited by circumstances. It can never be applied where, because of poor roads or peculiarities of temper or habit of life, the workers are naturally separated. The necessary isolation of the farmers for the sake of space makes any combination for the sake of economy in dividing their tasks almost impracticable. Even where farms are small, few advantages from division of labor by different kinds of work can be adopted. The farmers are too far apart to work directly [pg 185] into each other's hands. It is limited, too, by the natural demand for the products of labor. If the labor of one man can supply all need of iron work in his community, there is no possibility of employing ten, even with a hundred times the effectiveness. This is well illustrated in the country store, which sells everything over the same counter. Not even the grocery department can be separated until the demand is sufficient to support two store-keepers in two stores.
But even in places where division of labor is stimulated by demand, it can go no further than the number of distinct motions required in carrying through the manufacture of the article made. Indeed, economy requires that each motion should make a complete round, so that the work begins and ends for each worker with everything in the same position. The exception is when a motion with great exertion requires an interval of rest before a second. Two men with a cross-cut saw, although their motions are alike, do more than twice as much as one man, because of the relief in pushing back the saw.
A most important limit, however, is made by the inconstancy of natural forces employed in any industry. This is notable in all the processes of agriculture. No matter how many workers combine in raising field crops, they can gain but few advantages from dividing their tasks minutely. Each laborer must be employed through the year, and the change of seasons requires that he be ready for all the operations of the different seasons in planting and tilling and gathering through all the succession. Ordinary changes of weather, cold [pg 186] or hot, wet or dry, windy or calm, make necessary changes in his labor. The uncertainties of each year as to moisture and heat require a variety of ventures, so that no farmer dares confine himself to raising but a single crop. Even under the most favorable conditions the different stages of growth are so intimately related that the watchfulness of the same interested manager is required at every stage. A delicate plant must be carried delicately, even in transplanting. More important still are the conditions of fertility, which make a rotation of crops and even mixed farming essential to highest productiveness. If each field must have its definite series of cropping and tillage, together with the application of animal manures, the advantage of these combined operations under the oversight and labor of a single farmer outweighs the advantage of more perfect division of labor.
The result of all these limitations, so obvious in agriculture, is that farm work is but slightly more effective or more continuous than it was hundreds of years since. While improved machinery has immensely reduced the cost of certain processes, a year's labor involves innumerable changes of employment, so that no farmer inquires, in hiring his help, for an expert in any direction, but wants a man of all work whose skill is largely ingenuity in adjusting himself to the constantly changing duties.
Suggestions of fuller division of farm labor.—It seems possible, with the improved condition of agriculture and the nearness of ready markets, to attempt a larger use of division of labor in several directions. A group of [pg 187] farmers, well acquainted with the possible advantages, may classify their farms as grain farms, dairy farms, breeding farms, feeding farms and market-gardens. Such a community of interests would find not only the advantages of exchange between each other, as well as the rest of the world, but would soon build up bodies of expert young men in the several specialties, whose work would be at a premium everywhere.
With these interests recognized, still greater division of labor is possible. An expert in the care of trees and prevention of diseases to fruits and vegetables can quickly find employment, and may perfect himself in all the requirements of successive seasons. A dairy expert may find use for his superior knowledge and skill on successive tours among the dairy farms. Every farm large enough to employ several men gains some of the advantages of division by making each man responsible for a definite part of the farm work. The less the workmen are handled in gangs, the better each one's abilities can be trained to meet his responsibilities. These possibilities are greatly increased by every device for diminishing the effect of weather changes. Under-drainage gives large advantages in this direction from lengthening the time during which the same operation can go forward. Means of protecting crops in the field serve a similar end.
Perhaps the easiest application to be made in any neighborhood is a system of marketing, through keeping an expert collector and distributor of produce busy in a limited region. All the waste of articles too few to be carried to market is practically saved, and constant [pg 188] association with the markets of the world is made possible. Especially is this applicable to small fruits, milk, butter and eggs. If this market wagon can also serve to carry the daily mail for all the neighborhood, the problem of rural delivery would be almost solved with a trifling expense. Even where such a measure is not possible, neighboring farmers may approach such results by combining for market and mail days in a circle, each taking a different day of the week when he will do his neighbor's errands.
With increased confidence in mutual interests, it seems possible that specialists in various directions might grow up among a united circle of farmers. The use of machinery and blooded stock can certainly be greatly increased by careful adjustment of interests. Great improvements in seed and in methods of culture may be discovered by agreement among a body of farmers that certain individuals shall make a specialty of those improvements. It is even conceivable that a rotation of crops might be carried on upon a dozen farms, while each farmer gives his attention to his specialty. It would require, of course, a much closer combination in credit with each other than has yet been found among farmers. At the very best, however, farming must still remain the most prominent illustration of limitation in the application of the great labor saving and capital saving by minute division of labor.
Disadvantages of extreme division.—The great addition to wealth so distinctly traced to division of labor is not gained without some disadvantages to the community. Almost certainly the inactivity of body compelled [pg 189] by confinement to a simple portion of a trade induces physical weakness. The health of workers in factories is often uncertain, and the average of life is known to be reduced. While steadiness of employment contributes to steady habits, the reduced activity contributes to weakness. Perhaps even more perceptible is the tendency toward narrowness of mind. Ingenuity is developed in the “Jack of all trades,” although his information in regard to each one may be limited. The man who knows all about a very small part of one trade has little to stimulate his mind to exertion. Indeed, habit is liable to make his very action and judgment purely automatic. The fact that the raw hand can be quickly made effective makes the stimulation to self-education even less than in ordinary circumstances. The constant dependence of each laborer upon the routine of his work and his absolute dependence upon authority for his employment lead naturally to lack of self-control. A man may grow almost like the machine he handles, responding only to the demand of his overseer. These tendencies foster also a growth of class distinctions. Such workmen are thought of as operatives, held in a class by themselves. They may be expected to know little of the interests of community outside their own circle, and are often distrusted in matters of common welfare. They themselves distrust the leadership of those upon whose management they depend for employment.
All these disadvantages may be overcome by more community of interest among workers of all classes for their comfort and improvement outside their tasks. It [pg 190] is a fact that associations for the advancement of workers in social and political freedom and mutual self-support have grown most rapidly in the neighborhood of factories, where division of labor is extreme. A truly philanthropic spirit may be in entire agreement with the massing of labor for greatest accomplishment. The places of least development are always found where crowds of laborers work in mere gangs or wholly unorganized. The wholesome influences surrounding rural life are everywhere granted so far as physical development goes. They may also be granted in communities of general enterprise with reference to ready ingenuity and judgment. The farmer's boys moving to the cities carry not only physical strength and endurance but a mental capacity for ready adaptation to emergencies which develops into wisdom. The majority of leaders in great enterprises are still expected to grow up on the farm. This is undoubtedly in part due to the impossibility of cramping by extreme division of labor. At the same time a partial application of its principles is needed to bring leisure for some general culture and larger acquaintance with the progress of the world. As the evils of factory life can be cured by attention, so the weaknesses of rural life can be removed by a careful study of its needs. True education in both quarters is essential as a means of mutual understanding and adjustment of interests.
Great combinations.—The tendency toward improvement by combination of laborers through the possibilities of division of labor leads to still larger combinations in so-called factory systems, and even to a combination of factories in large corporations. This tendency has been especially marked since the multiplication of labor-saving machines and more perfect systems of transportation. Indeed, the possibility of extensive machine using, as well as extended division of labor, rests upon a combination of many forces under one general management. Beyond these advantages, saving is found in the necessary care for waste products, which often may be turned into profit, greater freedom of action from closer community of interests, greatly enlarged facilities for marketing, and the best possible devices for handling and transporting products.
All these advantages in great establishments are readily perceived, yet some have doubted whether the gains are so distributed as actually to increase the general welfare. Farmers, perhaps, as readily as any persons, distrust the power of great corporations. Wage earners, generally, in the expression, “corporations have no souls,” express their distrust of results. Yet so far [pg 192] as they actually introduce improvement in production so that variety of products is increased and the cost of production reduced, the whole community gains in large measure the total saving. Any one can realize the advantage by study of a single article of every-day use. In the middle ages the cloth in a garment was worth eight times the wool from which it was made. Now the value is chiefly in the raw product. The price of iron affects every farmer through the cost of his tools and implements or the quality of either. Compare the modern steel hoe, first in quality and then in cost, with the hoe of fifty years since. Then measure that cost in its relation to a day's work, as compared with the same measure in 1850. All are in this way benefited by reducing the exertion needed to procure any one article of use, since more exertion may be left for meeting other wants. If machinery and improved methods have entered less into the farmer's home life, he can find his own advantage from the range of such improvements in other directions by thinking what a pound of butter will buy for him today as compared with what it would buy before the period of machinery. (Chart No. XIV, p. 106.)
The introduction of labor-saving machines is a direct addition to human power and economy of time, and a means of converting useless material to meet human wants. That a new machine throws out of employment workers in that particular field brings a hardship which ought to be shared by the multitude who are benefited; but the probabilities are great that the improved method of manufacture will so increase the uses for the product as to bring into employment a far larger number of [pg 193] laborers. The spinning jenny threw out of employment several thousand spinners in the old way, but in twenty-five years the cloth-makers in England had increased from less than eight thousand to three hundred and twenty thousand. The machines which in 1760 were thought to have ruined some eight thousand cloth-makers, in 1833 employed two million persons. This is only a striking illustration of what has happened in every direction. It is perfectly evident that communities using the most machinery pay larger wages and far larger welfare to every laborer. It is not too much to say that the actual comforts within the reach of every laborer have been more than doubled within the last hundred years.
A few illustrations of the actual saving in cost of production and distribution may be interesting. Complicated machinery can never be used in producing upon a small scale, just as a small farmer can never afford the use of a harvester. All the benefits of invention applied to machinery have come through its use on a large scale. A factory making a thousand pairs of shoes each year cannot use such machinery as the one making a million pairs will need. Each one of the million pairs, therefore, costs the world less than each one of the thousand pairs. Again the large establishment, like an immense saw mill, being obliged to care for its sawdust, may devise a way of making this waste product of use in pressed blocks for kindling, or possibly in buttons or wood ornaments. The waste of the shoe shop is only a nuisance, but the waste of a great shoe factory is ground and pressed into all sorts of useful forms. All such saving of [pg 194] waste is so much added to the world's store of wealth.
That the large establishment saves unnecessary friction is shown in the order of any great mercantile establishment. It is still more noticeable in immense iron works separated from every other form of industry for the sake of freedom of motion. In these ways, principally, there is a saving of labor in the huge department stores, although the facilities for advertising, advantages for transportation in large bulk and the employment of expert salesmen in every department contribute to the same result. The general expenses of an ordinary store are estimated at nearly 40 per cent of the difference between wholesale and retail prices. The same expenses in the great coöperative store at Paris, the Bon Marché, are only 14 per cent. While the controllers of capital in the large enterprises have the first advantage of such saving, the very necessities of their business compel a sharing with their employés and with the public.
Even the so-called trusts, supposed to be contrivances for controlling the market, have really served in many instances the welfare of the whole community. A biscuit trust, in handling the most of the crackers in the market, saves great expense of advertising, a still greater expense in sales by traveling salesmen, or drummers, and immense waste of stock on hand through condensation into fewer warehouses, reduces its insurance to actual cost, and has brought to the public by means of all these savings a greater variety of crackers of almost uniform quality suited to the fluctuations of demand at a reduced price. No one doubts that even the Standard Oil Company, [pg 195] by means of its savings through consolidation, has at the same time preserved the general supply of oil from waste and brought it to every man's door, with a great improvement in quality, comparative safety in use, and an almost constantly diminishing price.
The record of facts shows that with all the tendency to great aggregations, and so to concentration of power, masses of wage-earners have had their hours of labor shortened, have gained facilities for culture in libraries, lectures and voluntary associations, have gained habits more systematic, and regular methods of life with greater constancy of employment, have better protection of civil rights, better provision for education of children, a larger insurance against accident, and a better provision for hospital care when disabled. The same system has provided methods for economical use of savings in joint stock companies, and cultivated a general unity of purpose and appreciation of others' welfare. Withal it has given to the mothers of families an immense increase of leisure for home-making, and at the same time has opened ranges of employment for women without homes. Even the rate of wages has not been diminished, but rather increased, as is shown also by actual records. That the great establishments cannot pay less than average rates is evident from the multitudes seeking to enter their employment. Moreover, they must pay their workmen regularly or appear bankrupt. Employers on a small scale can easily postpone upon all sorts of pretences, and failures are frequent. Suppose the distribution of milk in New York city were under a single management. A systematic division of territory would at once reduce the [pg 196] number of milk wagons by at least one-half. The certainty of responsibility would insure uniform purity, and means of transportation could be brought to perfection, so that the amount now delivered would actually cost perhaps not more than two-thirds the present price. While at present prices the profit would be large, the necessity for investing those profits would at once call for extension of the trade by reducing the price, and at the same time increasing the proceeds to farmers somewhere who furnish the larger supply. The better quality and larger quantity for the same money would certainly increase the demand, and probably with direct benefit to the milk-raisers. The essential element of distrust of individual management in large enterprises as to fair distribution of the profits stands in the way of such a combination.
Limits to aggregation.—It is easy to see that the advantages of great establishments cannot always be gained. The limits of demand restrict the possibility of profit in supply. The element of space in connection with the market and in relation to the buyers makes an important limit. Special advantages of location on a small scale may outweigh the advantages of aggregation. Utilization of forces in nature, like pure water or water power, or special qualities of raw materials, may outweigh all other considerations. In general the requirement of interested oversight in a single superintendent has checked such growth. The more perfect, however, the system of management, the less effective is such a limitation. It is possible with extreme division of labor to make distinct rules take the place of personal [pg 197] direction, and oversight is reduced to a minimum. All these limitations serve to check the too rapid growth of this factory system and to hold in check the tendency to misuse of power in possible monopolies. Any raising of prices which diminishes the demand destroys the advantage of a great combination. It makes its profits by the quantity of its products sold. A reduction of the quantity much more certainly than a reduction in price destroys the advantage. Hence a monopoly gained in the ordinary progress of trade can seldom operate for any long time to advance prices, though it may destroy the competition of smaller establishments completely.
Disadvantages of aggregation.—It is impossible to overlook a considerable number of disadvantages to the welfare of a community in a too rapid aggregation of its industrial enterprises. It changes large numbers of laborers from independent workers to wage earners, and thus makes them a part of the great machine, with an immense momentum in production which does not so readily yield to the fluctuations of demand. An independent worker is not worried if he has a leisure day. The great establishment cannot adjust its machinery to a lessened demand without a uniformity of reduction in wages or time of employment, or else the discharge of numbers of employés. This is one of the causes of over-production so evident in certain directions upon the coming of financial crises. Another great disadvantage is seen in the breakdown of any such enterprise. Then its employés, trained for its particular uses, find themselves not only without employment, but [pg 198] unfitted to drop into other niches of usefulness. The absolute routine of the great establishment so fixes habits as to make very difficult a change of work except in line of promotion in a similar organization. The dissatisfaction and distress from such absence of employment is more apparent than in ordinary poverty.
The strongest objections, however, to the great aggregations are found in the possibility of oppression through a monopoly of business, and therefore almost absolute control by a few persons of the interests not only of a large body of employés, but of every competitor upon a smaller scale. A large combination practically compels all to yield to its methods. The certain economy of methods has led to the statement, “Where combination is possible, competition ceases.” The common saying, “Competition is the life of trade,” becomes untrue whenever that competition implies a costly service. Competition is supposed to reduce cost by stimulating energy and ingenuity. But when that ingenuity can be better applied in combination, the result is the destruction of competition. Competition may drive the milk wagon faster, but combination will deliver more quarts of milk in the same time. The natural opposition to combination rests upon the same ground as the opposition to improved machinery. It certainly throws out of their ordinary employment a considerable number of independent workers.
This power of the combination is a constant temptation to unscrupulous and grasping managers to increase their advantage by vicious discrimination and false competition, expecting the destruction of others' business to [pg 199] increase their own. The largeness of the operation makes more plain the injustice of the maxim, “All is fair in trade.” The final dangers of combination are thus likely to be overestimated. It is not true that any larger proportion of false methods of business enters into the large establishment than into the small, and the possibility of profit in a great combination is quite as truly dependent upon the universal welfare as anywhere. The same extremes of prices mark the range for these establishments as for any others. The price cannot continue higher than buyers will pay with an increasing disposition to buy more. It cannot remain lower, of course, than will enable sellers to continue living as well as in any other business. Checks upon increased price come as certainly from substitutes as from rival production, and the ability of the people will always gauge the amount of sales. The expression “What the trade will bear,” means a price such as not to diminish consumption. Indeed, the business principles of a great trust are essentially the same as those in any single manufactory. A trust which stops the work of certain factories in a combination for the sake of diminishing the output, because of danger to prices from too rapid production, follows the same principle as a farmer who stops raising wheat from the probability of too much wheat in the market. The farmer would better lose the use of his land for a time than lose the advantage of both land and labor by over-production of wheat. In the same way a trust may wisely hold its fixed capital unproductive till the consumption of the community reaches the full extent of its power to [pg 200] produce. The power of one combination to interfere with the workings of another by indirect methods, like investment in the other's stock, is an evil to be treated like any fraud. Laws and courts are in the power of the people, and should preserve the rights of all.
One great danger of large combinations is the tendency to govern by iron rule instead of by fair judgment of individual cases. This is a difficulty always connected with great enterprises, to be cured as growth advances through establishing well trained experts whose judgment makes the rules not only good in themselves, but well executed. The government itself is subject to the same difficulty, as seen in the handling of an army, and is obliged to meet it in the same way. Even the abuses often referred to from enormous difference of wages between the executive officers and the inferior operatives are quite possibly only a natural method for solving these difficulties. A first-class officer has no difficulty with his men. In general those institutions whose management is costly do better for their workmen than the weaker institutions with weaker men at the head.
The supposed dangers from too rapid improvement in the machinery of production are scarcely to be credited in the light of improvements during the last hundred years. Every improvement has certainly given a larger enjoyment and better employment to the masses of people. The enterprise which invents better ways of accomplishing anything is the best possible means for enlarging and stimulating the wants and abilities of the whole people. The very profits themselves are sure to [pg 201] awaken larger enterprise, and even if the accumulated surplus is distributed in so-called watered stock, it does not cease to promote production. The wider the distribution of stock, the more permanent and more generally satisfactory is the working of the great combination. If employés themselves become sharers in the business, the true interests of all are likely to be promoted. When the savings of the multitude can be perfectly united in a joint stock company, to furnish the capital with which the same people work, the general conditions of wealth production for all the community are fairly met.
Bonanza farms.—An illustration of some effects of aggregation may be seen in the enormous farms of the wheat regions of America. There machinery is introduced as far as possible, all work is methodically planned and executed, and wholesale rates in purchases and in transportation are secured. The result is that certain staple products, especially wheat, are raised at a cost far below the average cost to moderate farmers. The result is large profits upon the capital invested, in spite of the fact that such farms do not make best use of soil fertility and certainly do not maintain the best condition of soil for future use. This, however, is due rather to the nature of pioneer farming, which makes immediate use of the powers of the soil, than to the nature of the management. It is conceivable that the same ingenuity may continue the development of large farms under greatly improved agriculture. In that case the general effect will be much more widely felt than now. So far it seems that bonanza farming is [pg 202] confined to a very few lines of production, where everything is bent in the direction of lessening labor instead of benefiting the soil or making homes.
There is no question as to the general advantage of small farms in making farm homes. It is a question whether the general improvements in agriculture, except in machinery and its use, have not come from the diligent ingenuity of the small farmer in making most of his own acres. Ben Franklin said, “The best manure for the farm is the foot of its owner.” The interested constancy among small farmers certainly develops both character and ability in any country. This fact has probably been one reason for the small farms of large parts of Europe. One-third of France is cultivated by owners of farms averaging 7-½ acres. Four-fifths of Bavaria, Belgium and Switzerland are in farms of less than twelve acres. Even Prussia has 900,000 farms of less than four acres. These farms vary in quality from poorest to richest, and peasant farmers are not able to boast of their wealth. Yet some of the most fertile regions are made so and kept so by the labor employed upon the small farm. Some of them also involve large capital. The Isle of Jersey, where land is worth $1,000 an acre, is so divided that an average farm is eight acres. Of course, but little labor-saving machinery reaches these places. Tillage with the spade costs five times as much as tillage by plough; yet the small farmer finds such advantage from its use as to call it gold mining. It is probable that the strong competition of immense farms in grain raising, possibly also in sugar raising from either cane or beets, and in seed raising, will awaken among the smaller [pg 203] farmers attention to finer grades of farming and more care for the fertility of their fewer acres.
On the whole, the tendency with increasing population is toward smaller farms with more intensive farming. Whether our country, with its stronger commercial energy, will follow this tendency as exhibited in northern Europe seems doubtful. It is not likely that we shall ever admit the legal restrictions under which division and subdivision have made their way in that region. The question will doubtless be settled by economic conditions independent of legislation. At present we are far from either extreme, as can be seen by reference to Chart No. I, p. 9.
Department stores.—Increasing application of the principles of aggregation is seen in the so-called department stores, which not only deal in everything but with everybody, extending their trade by mail over large territory. The very evident economy of such aggregation of capital for purposes of exchange appeals so directly to the customers as to make the sufferers in competition cry out in vain for restrictions. Such stores seem sure to maintain their advantage in exchange, except with reference to mere local distribution of every-day necessities and expert handling of specialties. The community does well to give attention not so much to restrictions upon this trade as to reduction of opportunity for abuse of power over the mass of employés under control. The great establishment will certainly bring more satisfactory conditions in time than the multitude of small ones beyond the reach of public inspection.
[pg 204]Trusts.—Of late years the advance of combination in so-called trusts has been enormous. The underlying principles of economy already illustrated furnish the occasion for such combinations, but the immediate advantage to promoters of such enterprises, because of the supposed power in control of the market, is found in the speculative interest in stocks. In this respect the multiplication of trusts will furnish the principal weapon against them. Yet the dangers to the industry of the country, as well as to the safety of exchanges, from such rapid consolidation of management are easily perceived. It is certainly necessary that responsibility for such enterprises be definitely fixed upon the share-holders. And it is more than probable that government inspection of such business may become as necessary as it now is of the banking systems of our country. Some students of the subject foresee a final assumption of absolute control by the government of all industrial enterprises as a result of this tendency to aggregation. The question cannot be discussed in this connection, since it involves a wider range of welfare than can be considered under production.
Possible combinations for farming.—It is proper to close this chapter with suggestions as to the possibility of gaining the advantages of combination for farming communities without disturbing the present condition of ownership of land. When our farmers generally shall have outgrown the disposition to make money by emigration, so that each farming community is made up of farm homes with a stable population, more intimate associations for farm operations than now are possible ought to become [pg 205] the rule. Suggestions have already been made as to the possibilities of greater division of labor, but other advantages of combination in the way of labor saving can certainly be secured. More definite business methods and mutual confidence in a neighborhood of farmers make possible enormous economies in the way of mutual protection and advantage. The removal of fences, with possible combination in seeding and tillage, a universal method of dealing with insects, blights, rusts and similar plant diseases, the handling of products in company, and above all a perfect sympathy in all methods of improvement, education and development of enterprise, will accomplish wonders.
Good government chief.—The productive energy of any country is encouraged chiefly by what we call good government. This means especially security of property rights by prevention of frauds and robbery of every kind, and free interchange of ideas, as well as of products of industry, and general public intelligence. It is not enough that individuals throughout a community be fairly intelligent, but they must have sufficiently mutual ground of intelligence in common purposes and common interests in everyday work to bring without effort a perfectly mutual confidence. Where these essentials are absent no devices can operate extensively for the encouragement of energy in production. Where they are present it is always possible to add extra incentives, to give direction at least to the energies of the people, and perhaps to increase those energies. Some of these incentives are too important to be overlooked.
Premiums.—The most simple means of encouraging enterprise is found in premiums of various kinds offered by individuals, local societies or municipal authority. These operate by adding to the natural advantage of energetic labor some special reward in recognition of its [pg 207] accomplishment. Illustrations are familiar in connection with so-called fairs of all kinds where prizes are distributed for the largest product of a kind, the most profitable crop, the best article for any purpose, the greatest variety of crops or stock, or for any conceivable device which seems to add to the producing power of the community. Governments often offer premiums for plans of public buildings, and sometimes for offensive weapons. All of these operate upon the one principle of arousing special energy by superior advantage given to the successful competitor. Its advantages are evident. Its disadvantages sometimes outweigh advantages. It encourages somewhat the spirit of gambling, resulting in devices for winning the prize through false representation. It exaggerates the importance of showy qualities for the sake of notoriety, and it fosters those jealousies which too constantly interfere with the welfare of communities.
Both advantages and disadvantages are well illustrated in agricultural fairs. These have proved a most admirable stimulant to better agriculture, where clear-headed, intelligent judges have judiciously distributed prizes of such a nature as to have their chief use in establishing the quality of the product shown without catering too distinctly for the enthusiasm of the crowd or for individual profit. The chief end of all such incentives is rightly found in the educational influence from comparison of products and the establishment of standards which the whole mass of the people may be led to accept.
Bounties.—A less common but extensively used incentive [pg 208] is in bounties. These are advantages of various kinds, frequently in money, given by local or general authority for peculiar services or special enterprises. A familiar illustration is seen in the bounty of late years offered by different states for the production of sugar, especially sugar from beets or from sorghum. The object is evidently to arouse the energies of a community in a special direction, with the expectation that the establishment of a new industry will, in the nature of exchange, promote the welfare of all. Some countries have stimulated foreign exchange by a bounty upon exports, such as Germany now pays upon the beet sugar exported to other countries. Of the same nature are the gifts made by local communities for the establishment of mills, factories, railroads, irrigating ditches, all of which are supposed to bring profit to the community in general in much larger proportion than the special enterprises have received. The principle is the same when bounties are offered for the destruction of wolves, foxes and other vermin, or when standing rewards are given for the arrest of criminals.
There can be no question of the right of a community to offer this extra stimulant to particular exertions, but the wisdom is doubtful. In the first place, bounties are liable to withdraw capital and labor from more certain methods of production to more uncertain methods. Indeed, the chief object of the bounty is to entice into experiments those who would otherwise hesitate. The advantage of the bounty is very liable to be overestimated. People hasten in steps to secure bounty without careful study of the business they undertake. This is [pg 209] especially true of bounties for establishment of factories in new locations. They attract the least experienced and most speculative men, without consideration of the far more important elements of immediate market and convenient employment of labor. Railroads are built for the bonds voted without care for future profit. Enterprises of this kind, promoted by bounties, are especially liable to failure. The history of development in the west gives overwhelming evidence of their weakness. Even when the bounty is offered for reduction of vermin, it is often misapplied. Numerous cases are on record where the bounty became a stimulant to enterprise in raising the very animals to be destroyed. Even rewards for the arrest of criminals seem sometimes to create a body of men who thrive by fostering a criminal class, with a hope of sometime getting a profit from arrests. As a means of stimulating general industry they are too unstable to be satisfactory. Most probably political parties are in constant contention over the maintenance of the bounty. No more insidious enemy to the purity of politics can be found than the selfish interest aroused by special bounties.
Monopoly privileges.—Government monopolies have been a favorite method in past ages of fostering particular enterprises. These are in the nature of an exclusive privilege, granted to individuals or corporations for the manufacture or sale of particular commodities, and occasionally for special public services. These were once a method of showing royal favor, and the word monopoly has in its very nature the idea of inequality. Hence they are unpopular under all circumstances, except when permanent and universal advantage is secured.
[pg 210]License.—The monopoly of service is secured by the issue of a license. If granted through official favoritism, the wrong is easily appreciated; if granted to all who conform to necessary requirements for the general welfare, as in showing qualifications for teaching, compounding of drugs, or practice of medicine, the license is recognized as useful. In fact, it seems to furnish security for satisfactory governmental service, and is the basis of all promised reform in civil administration.
Patent and copyright.—The chief illustrations of a genuine monopoly maintained by government authority are found in the patent upon inventions and the copyright upon publications. A patent is conferred upon the inventor of “any new and useful art, machine, manufacture or composition of matter, or any improvement thereof,” upon proof that the invention is original, not previously in use anywhere, and likely to be beneficial rather than detrimental. This patent secures to the inventor the sole right to make, use or exchange articles manufactured after the pattern described, or upon the principle involved in construction. This monopoly is limited usually to a term of years supposed to be sufficient to secure to the inventor a reward for his exertion. The patent laws of the United States protect the rights of an inventor for seventeen years, entitling him to damages upon proof in the proper court of infringement upon his patent. Such protection extends, of course, only throughout the territory under the same government. It may be secured, however, in foreign nations under special regulation, so as to cover [pg 211] the most of the civilized world. The copyright serves the same purpose, and is limited in much the same way, for securing to the products of thought or of taste a proper reward for the powers exerted. It gives to an author control over publication of his thoughts during a period of twenty-eight years, in order that the users of his thoughts may actually pay what they are worth. This, too, is confined to the limits of the government issuing it, unless by agreement an international copyright is provided by the laws of the several countries.
Franchises.—A still more noticeable monopoly is granted by municipalities under what is called a franchise for the establishment and maintenance of water supply, public means of artificial lighting and heating, or means of public transportation. These are under government control usually in cities, because they employ the public streets for carrying on the enterprise. The franchise is really an extension of the license in particular directions. This is usually issued with the expectation of great public benefit from a large investment of capital which would not be made without relief from competition, because not immediately profitable. The franchise usually carries with it certain restrictions as to use of public highways and limitation to a term of years. It necessarily involves the right of government inspection and control for the general welfare.
Difficulties from monopoly privileges.—All of these monopolies are granted for the purpose of conferring upon the whole community benefits that could not [pg 212] otherwise be secured. They are wise only so far as they secure this result. If the patent right system wastes the energies of inventors in contrivance of useless devices, there is loss; if it builds up a class of mere speculators, there is waste; if it fosters monopoly beyond the giving of a fair reward for invention, it is robbery. The exact limit of time during which a patent is good stimulates to the utmost exertion for wide introduction of its benefits, and at the same time prevents the burden of lasting monopoly. The dangers are chiefly in the administration of patent laws, from the careless issue of undeserved patents, or in a combination under a series of patents to maintain a constant monopoly. It is a safe rule to issue patents only for particular applications of scientific principles and not for the discovery of the principle, which can be protected in publication by copyright. Departures from this rule cut off the possibility of more perfect contrivances and fair competition in devices and methods. There can be no question of the general advantage of protecting a genuine inventor from the trespass of others to secure him a fair compensation. No other plan for a fair exchange of such services has even been suggested. The unsettled question is the proper limit of time for a patent to run.
The advantages and disadvantages of copyright are essentially the same in character, though the dangers are less. Since the large part of the reward of an author or an artist is in the repute he may secure, there is little danger of fostering an unfair spirit of monopoly. The franchise is subject to the same principles, [pg 213] but its dangers in practice are very great. So long as the advantages to the corporation securing the franchise may be enormous, if it is sufficiently extended, there is great temptation to bribery, both in the original issue and in the maintenance of inspection and municipal control. Nothing has so interfered with good government of cities as the manipulation of franchises. These abuses underlie the popular call for municipal ownership of water works, lighting plants and street railways.
Protective duties.—A still more widely extended method of stimulating industry by special incentives is seen in what is called a protective tariff. This is a system of duties upon articles produced in foreign countries so levied as to check the natural competition by increasing their cost to consumers. The increased cost of such articles, if not too great to destroy the demand, increases the incentive to manufacture similar articles within the country.
The schedule of tariffs becomes then a very important element in all productive industry, and requires the nicest adjustment to the needs and abilities of the nation. If associated, as is usually the case, with the raising of government revenues, the adjustment becomes more difficult, and requires the judgment of experts in commerce as well as in statistical knowledge of industries and government necessities. While in any country the existing tariff is presumed to have been established to meet public need, the fact that there is necessarily a restriction upon freedom of exchange makes it always open to question. The tariff laws, like [pg 214] all laws restricting freedom of action, must always have evident reason for existing. The burden of proof rests with the one who defends such laws. This is especially true with reference to tariffs, because the trend of civilization is certainly toward greater freedom of intercourse in all directions. The barriers between nations are generally giving way before the introduction of ready transportation and quick communication. The statesman who maintains the necessity of restrictive tariff must always stand ready to explain this obstacle to more complete association. For this reason we have the constant agitation of tariff questions and the impossibility of permanent settlement in any particular.
For the same reason there are always two phases of a tariff discussion. The student of social science inquires chiefly as to the tendencies of advancing society with reference to such restriction, and, seeing the barriers becoming less and less, is likely to seek the final removal of every such restriction. The statesman, busied with the immediate conditions of the limited community whose interests he guards, is liable to be for or against any particular restriction as it fosters or hinders those interests. For this reason statesmen, of whatever party, are subject to the bias of local interests, and have even been known to change their views with a change of such interests. In our own country, when party lines are drawn upon the tariff, it is quite possible that sectional lines may also mark the party supremacy. In fact, it is possible for any man to believe in freedom of trade as the ultimate condition to be sought, while he favors in immediate practice restriction or even [pg 215] prohibition by a definite tariff. The purpose in this chapter is to give a brief outline of arguments for and against such tariff in general, leaving entirely to practical statesmanship the decision of special questions.
Reasons for protective tariff.—A system of restrictive tariffs is thought to contribute to the welfare of an entire community by artificially increasing the natural diversity of employments. If new enterprises can be fostered, exchanges are greatly increased, all the advantages of exchange are secured within the country, and the general intelligence of the people is increased. With this comes the enormous advantage of what is called a home market for the cruder products of industry. This is especially to the interest of farmers raising bulky products or those not likely to bear transportation. It is further thought to foster a better agriculture by a more natural return to the soil of elements removed in cropping, the nearer body of population making such return possible. It is also thought to make at once available the natural resources of a country in mines, quarries, water powers, etc., which might otherwise long remain useless. It is contended for as a means of checking unfair competition between a long established community with special advantages for factory methods, either in large accumulations of capital or low wages of laborers, and a newer country where capital is scarce and wages are high. It is sometimes held to be a means of maintaining a high standard of wages through the advantage actually conferred upon certain lines of industry, upon a supposition that competition at home without these favored industries would [pg 216] reduce the wages maintained in other industries. If a tariff on wool calls into profitable use a large amount of farm capital in sheep raising, every wheat raiser is at the same time benefited by reduction of competition in the wheat market. If the capital and labor employed are enticed from other countries, the effect is the same by increasing the demand at home for the wheat. That this does not operate so long as wheat raisers come to a market where a surplus must be consumed in other countries does not destroy the argument, since the tendency is to reduce the surplus. The system is also thought to encourage, in lines of industry likely to prove productive, a rapid development of labor-saving machinery and new methods of manufacture, which may some time give to a nation superiority in the markets of the world. To many there seems a much more important reason for restrictions, in order to establish every needed form of production for the sake of national independence. That nation which contains within its own borders the means of supplying all the wants of its people is supposed to be more capable of independent growth, and to be freed from hampering competitions of trade, that may lead to wars and, perhaps, to extreme suffering in case of foreign war.
For abundant examples in support of these various propositions, appeal is made to the history of the world by comparing countries developed under a restrictive tariff with less developed ones free from such restrictions. The history of our own country, under the ups and downs of tariff legislation, is also appealed to. Even the extra cost of certain articles to the whole [pg 217] people, which is the sole basis of advantage to the fostered interest, is thought to be more than compensated by the direct advantage of increasing competition at home, where it will have the most wholesome effect upon the market price. Proof of this, too, is sought in the rapid development of iron and steel manufacture, where protective tariffs have been most persistent.
Reasons against protective tariff.—Against a system of protective tariffs many strong arguments are not wanting. It is contended that a tariff on iron goods, for instance, is just so much an added burden upon all consumers of iron, and, since the bulk of consumption enters into the cost of articles of universal use, the greater part of the burden is borne by the poorer classes of people, who consume as much as the more wealthy. If the restrictive tariff actually limits the introduction of foreign goods, as must be the case if it acts as a stimulant in production, the revenues received are far from being in due proportion with the cost to the people, since essentially the same tariff is paid by the consumer whether the article is imported or manufactured at home. Although it is not true that in every instance the tariff is a tax, in so far as it benefits the home manufacturer by advanced prices it must be. In so far as it operates for protection of favored industries, it certainly fails to serve the purposes of revenue. The diversity of employment evidently fostered by tariff is said to be unnatural and likely to continue expensive, and any advantages of market at home are sure to be overestimated, especially with reference to staple products of the farm, since the surplus necessarily forming [pg 218] a basis for prices must be sold in foreign countries without the advantage of direct exchange for articles of their own production. That is, if our tariff restrictions limit the market of a foreign people, they also limit the ability of that people to purchase the products which we are obliged to sell them. It is contended further that a rapid development of varied industries, instead of maintaining soil fertility, tends to more rapid exhaustion by making more probable the consumption of cruder products of the farm in villages and cities too remote for return of fertility, although within the same country. The development of natural resources under stimulant of a tariff is admitted by its opponents, but represented as a waste of effort, since the tendency is to withdraw capital and labor from more productive industries into less productive, and that, too, at the expense of the more productive. If factories cannot give an equal profit with farming, it is absurd to tempt capital away from the farms into factories. So, although wealth may be accumulated in showy enterprises, the people, as a whole, are less thrifty and bear unequal burdens. It is further contended that the total labor of the community, when a part is used in unprofitable development of resources, is made on the whole less productive, and therefore the people are less able to buy their neighbors' products, and must live with diminished comforts. In that case all the haste in developing natural resources is actual waste.
If, on the other hand, the restrictive tariff invites capital from abroad for the sake of gaining the trade of a country, the diminished profit of labor in some foreign [pg 219] country compels emigration, and such emigrants are likely to follow the capital. Only the poorest of foreign laborers will be compelled to help themselves by emigration, and only those will gain by the change of location. Thus it is said a restrictive tariff encourages the least desirable form of immigration. This is illustrated in the development of the mining industry through the fostering effects of the tariff.
There can be no question that any restriction upon trade may foster the contrivance of combination to secure monopoly. Hence it is often claimed that the existence of trusts is due in great measure to tariff restrictions, preventing the competition natural in the commercial world. It is certainly true that the restriction of a patent right may make possible the abuses of a trust. If trusts were confined to protected industries or to countries maintaining protective systems, the weight of the argument would be stronger. It is certainly true, however, that the wider the range of competition without restriction, the greater the protection against combination for sake of monopoly. The monopoly in kerosene oil would be a greater menace but for the possible check of competition from abroad.
Such artificial restrictions, again, prevent the naturally rapid growth of international commerce, which gives the surest foundation for more permanent conditions of peace and greater extension of welfare over the world. The tremendous interests of the commercial world are the strongest safeguard against unnecessary warfare, and the best protection to any nation is the fact that it makes itself needed by all the rest of the world.
[pg 220]Thus inter-dependence of nations rather than independence is the essential aim of those who seek the world's welfare. An alliance of two peoples for commercial purposes is the best guaranty of mutual support of national institutions.
In proof of all these statements, the experience of the world in widely varying regions is appealed to. The natural breaking down of prohibitory tariffs has given opportunity for observation. Especially has the commerce between states of the Union, where it is absolutely free, shown the general advantage of such freedom in rapid development of wealth and welfare. While these states have a common interest in government, they are nevertheless widely distinguished in peculiarities of local government and in characteristics of people. While, therefore, there is possible doubt as to the wisdom of rapid removal of restrictions, there is every probability that such restrictions will gradually be outgrown. Even the temptation to make retaliatory duties, where other governments restrict against our products, is growing less with increasing experience of the true advantage in exchanges. The world is gradually coming to see that the better market any region of country affords for the rest of the world, the better market the rest of the world affords for it.
Incidental tendencies from tariff.—The incidental effects of restrictive tariffs, and especially of the necessary instability of restrictive legislation, are too interesting to pass by, though very limited space can be afforded them. In the first place they contribute to a speculative enterprise which leads to waste of wealth in [pg 221] unpromising undertakings because of a necessary over-estimate of the advantage given. On the other hand, a reduction of the same tariff after a series of years is almost sure to bring panic in that line of industry previously fostered. So the fluctuations of tariff laws are one element in periodic expansion and contraction of business. The tariff laws are certain, also, to involve the worst element of influence through the lobby upon legislative bodies. Even though the charge of bribery be utterly false, the general respect for legislative bodies is lowered by charges and countercharges for political effect. As an occasion for such charges scarce any other form of legislation serves as well. Even the people themselves are easily assumed by their neighbors to weigh their opinions upon a tariff measure by their personal interests.
The indirect influence of a new tariff law upon the industries of a country can scarcely be foreseen. So interlocked are all the varieties of manufacture and trade that a change in price of any one article of commerce may affect hundreds of others, sometimes much more than the article restricted. It is easily seen that a duty upon iron of a particular shape or quality may actually prohibit the use of that iron in some product which already touches the margin of profit. These incidental effects can scarcely be foreseen by even the wisest statesman. The practical adjustment of conflicting interests in the framing of tariff laws should be the work of experts. If all parties could unite in establishing a bureau of commerce, domestic and foreign, as dignified as the Supreme Court of the United States, and [pg 222] as independent of party interference, such a body might frame a consistent tariff law, gradually perfecting it in adjustment to all interests and explaining its bearings to all parties. Such a body could take account of the great interests of agriculture in the commerce of the world, and weigh properly the indirect influence of restrictions. The marked influence of fluctuating tariff upon sheep raising, so familiar to all farmers, might then be fairly appreciated. Under present methods it is very certain that any tariff law is largely a compromise, with limited judgment, between agitating conflicts of interested promoters. The farmers, of all people, can afford to be conservative of all interests, and should favor such methods as will work toward enlargement of commerce without destruction of industries. If possible, they will wisely seek the removal of tariff questions from practical politics.
In concluding this subject, it is wise to suggest that the true principle of regulations for national industry are the same as those for true family economy. The family should so plan its work and ways as to make the best possible use of the powers of every member. It is no economy to buy cheap things unless the members of the family can be better occupied than in making them. It is poor economy to make those things which cost more time and effort than would be used in making something else for exchange. Home production is best when this makes the home labor more effectual, but worst when it interferes with the profit of labor. The farmer who stops harvesting to mend his harness when he might employ the harness-maker is wasteful; but if he [pg 223] mends it on a rainy day he saves time which would otherwise be less profitably used. So the nation whose capital and labor are not well employed may do wisely in developing new industries, even at a considerable expense for introducing the new industries. But if all the nation's energies are profitably employed, the costly development of resources may wisely wait for future capital and labor. So all special incentives require a constant inquiry as to beneficial results supposed to follow, and the policy of the government must conform to the needs of general welfare. Even vested rights are subject to the law of welfare involved in the original act establishing special privileges. Public use, not private interest, is the true reason for the existence of any such privileges or protection.