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ing must be followed by a reaction that will leave them as ill off
as before." " To go on reasserting that unionism does not raise
wages, and that to all appearances permanently, would now-a-
days be running too completely counter to every-day experience.
To assert that it cannot raise them, is the utmost extent to which
any but the hardiest theorists still venture to go" (Thornton).
True it is that strikes have frequently, perhaps in a majority
of cases, ended with a victory for the masters; but the very
rise in rate thus successfully refused has been almost always
conceded afterwards to prevent a renewal of the strike ; and
the gain thus made, when the aggregate of increase is com-
puted, has been such as to cast into the shade all the sacrifices
and losses incurred during the strike.

§ 150. Trades' Unions' strikes need not succeed if the masters
would unite as closely and cooperate as heartily as the men.
As a rule tbe employers are taken in detail. The strike for an
advance is made in a few establishments, and those that it throws
out of work are supported by the members of the Union at work
elsewhere. Succeeding in these establishments, they then make
the same demands in other quarters, and with the same result.

Strikes have utterly failed in a few cases, where the masters
throughout a whole trade have at once discharged all members
of the Union, thus retaliating by what is called a " lock-out."
But as a rule the employers of labor have not the means of
effecting close association, that their workmen possess. Busi-
ness makes them rivals ; they are often blindly exulting in the
embarrassment of a brother capitalist, when they might well
read in it a prophecy of what is coming on themselves. Nor
have they any of the vigorous class feeling and opinion, which
enables the workingmen to compel unwilling associates to fall
into line.

§ 151. These Unions, originating in England about half a
century ago (at first merely as Benefit Societies, which most of
them still are), have spread into France and Germany, and the
United States. They were brought across the ocean by English



THE KESTOKATION OF HARMONY. 149

and Welsh operatives, attracted to our shores by the superior
advantages possessed by our working classes. They are still an
exotic on our soil ; their strikes are generally in the hands of
persons of foreign birth ; they have never attained the complete-
ness of organization and the effective management that character-
ize those of England. This is due to the fact that there is
really no such need of them in a country where every man can
leave the workshop and become a farmer if he will; where the
supply of skilled workmen generally falls far below the demand;
where the utmost freedom of association co-exists with the habit
of spontaneous action ; where wages are steadily and materially
advancing; where public sentiment gives no support to the doc-
trine that low wages are best; and where social and political
prestige is rather on the side of numbers, than on that of wealth
and the capitalists. They have unquestionably checked the
growth of some of our industries by limiting too much the
number of persons who may be admitted as apprentices, a rule
that does far more mischief in a rapidly expanding country than
in one that is nearer the limit of its industrial capacities. But
after all, it must be borne in mind that united action is in many
cases the best and most effective means for labor to secure fair
terms in dealing with capital; and that there is in the Trades
Union itself, apart from the outrages sometimes perpetrated in
its name, nothing to call for reprobation.

§ 152. Labor and capital in conflict are in an unnatural state ;
harmony is their true relation. For reasons already given,
capital finds its account in the cheerful service of labor, not in
its discontent. To labor, capital is a benefactor in the highest
sense ; were the whole class of capitalists with all their accu-
mulations to be annihilated, labor would be reduced to indigence
and a struggle for existence more severe than can easily be con-
ceived. The capitalist is the captain of industry, who takes
the unorganized mob of men, drills it into a disciplined army,
supplies them with weapons, ammunition and a commissariat,
and leads them to industrial conquests. He is able to do so be-
cause he has accumulated instead of merely consuming; his



150 SOCIAL SCIENCE AND POLITICAL ECONOMY.

right to his million rests on exactly the same ground as the
workman's right to his week's earnings.

By what method to restore a lasting harmony between the
two, is a great question of the day. The first and simplest
method is by arbitration. Where it is possible to obtain referees,
in whose impartiality and intelligence both parties have confi-
dence, and where both are ready to submit their case, disputes
are easily settled and harmony restored. The ordinary courts
of justice are not available for the purpose, because they cannot
adjudicate the terms of contracts not yet made., and because the
judges have no special acquaintance with the matters at issue.
The establishment of tribunals of arbitration chosen from both
masters and men, with the sanction of government, has been
successfully tried in England, and these have put an end to
several recent strikes and lock-outs. Something like these,
though more official in their character, were the Conseils de
Prudhommes of mediaeval France, which were revived by Na-
poleon I. in 1806 ; but the latter are rather government courts
of selected experts to decide legal issues.

§ 153. A second solution is offered by the system of coopera-
tion, whose advocates would abolish the conflict between capitalist
and laborer, by uniting the two functions in the same persons.
They would have workingmen unite their savings to establish a
workshop of their own, to be managed by foremen of their own
selection under rules adopted by the whole body.

Instances of this industrial method are to be found very early
in our own country. The Greek merchant marine is based on
the same principle, and it has secured, through the zeal and
energy of its sailors, nearly the monopoly of the carrying trade
in the Mediterranean. But the first proclamation of the method
as a means to revolutionize industry and commerce was made by
the socialist Robert Owen. His design was to set up coopera-
tive stores rather than workshops ; to abolish the profits of
middlemen rather than to get rid of the wages system. About
182-1-30 many societies were formed on this basis to make
" every man his own shopkeeper." The most successful was the



CO-OPERATION. — INDUSTRY. 151

" Rochdale Equitable Pioneers," organized in 1844. The politi-
cal troubles of 1348-50 called attention to this method and to
successful applications of it to industry in France. The Christian
socialist party (F. D. Maurice, Chas. Kingsley, Thos. Hughes,
J. M. Ludlow, &c.) urged its general adoption as a remedy for
the deadly competition of the wages system. Every man was to
be his own employer as well as his own shopkeeper. In spite
of many failures, cooperation has an honorable record of suc-
cesses to show in France, England, Germany, Spain and the
United States.

If considered as intended to supersede the wages system en-
tirely, cooperation is open to serious theoretical and practical
objections. In the light of the true law of social progress
(§ 30), it will be seen to be a decline in industrial organization,
when duties and functions that have been distributed among
several persons are united in the same person. It would be a
loss on all sides, were the captain of industry to cease to exist,
and were his functions to be vested in the whole body of work-
men. The singleness of purpose, the clearness of outlook, and
the energy that large industrial operations demand, could never
be brought into play by an association of workmen, or by dele-
gates chosen from their ranks and subject to their control. As
a rule, the possession of capital is itself the gauge of business
capacity, and of the power to organize and administer an estab-
lishment. To exclude those who possess these from their
present position, would be to deprive industry of its natural
and trusted leaders. Now if cooperation were to become uni-
versal they would become mere money-lenders, or else their
capital would be entirely withdrawn from the sphere of produc-
tion, — a loss of the results of past labor that would be eminently
deporable.

In practice it has been found difficult to secure the right sort
of men to take the place at the head of cooperative establishments.
Men of the necessary cpualifications are generally able to com-
mand their own price elsewhere, and are too well satisfied with
their positions to give them up to begin a mere experiment here.



152 SOCIAL SCIENCE AND NATIONAL ECONOMY.

And if they did, the estimate put upon their services by their
new associates is commonly much below their deserts, so that
they would soon be glad to go back to their old places. In
the absence of first-class men, it is commonly not the second
class that are chosen, but rather men of an inferior grade but
more showy qualities.

§ 154. Less open to objection as a solution of the question is
the plan of industrial partnerships. In this, the proprietor of
an establishment agrees to pay his workmen the current rate of
wages, and also to distribute among them at the end of the year
all or part of the net profit above a certain percentage, say 15
or 20 per cent. This method identifies the interests of labor
and capital without confounding their functions. The men are
stimulated to do their utmost, — to avoid all waste as tending to
diminish profits, and all careless work as injuring their market,
— and to keep each other up to the mark by the force of public
opinion.

This plan also is no novelty in our own country. Thus in
Albert Gallatin's Glass Factory (established in 1794 at New
Geneva, Pa., being the first west of the Alleghenies), every
workman had a direct interest in the profits, besides regular
wages. The whale fishery and the China trade were managed
on the same principle. It was first urged upon the attention of
Europe by Charles Babbage in his Economy of Manufactures
(1829). A Parisian house-painter, after making trial of the
wages system in 1842, took his workmen into this limited sort
of partnership, with moral and financial results that attracted very
great attention, and led to its imitation by a considerable-number
of establishments in France and not a few in England. It has
been found that the plan restores thorough good feeling between
masters and men, where the worst irritation has existed for
years ; that it makes the workmen eager to adopt improved
methods, that they would previously have resisted to the utmost;
that it diminishes the amount of drunkenness and thriftlessness,
and reduces to a minimum the number of holidays spent in
dissipation ; that it creates a vigorous public opinion against eye-



INDUSTRIAL PARTNERSHIPS. — CREDIT BANKS. 153

service and waste, and leads men to pride themselve upon giving
good work for their wages. In some cases the amount of profits
reserved to themselves by the firm, was fixed at a higher percen-
tage than they had ever earned ; and yet at the end of the year
they had a surplus to divide with their workmen.

The plan has been adopted in a good number of American
establishments, but it may fairly be hoped that it will be ex-
tended to many more, as it seems to be the least objectionable
and the most effective of all the new solutions of the labor ques-
tion. Of course circumstances will demand manifold modifica-
tions of the principle. The number of laborers employed in
proportion to the capital invested, must determine what is the
proportion of the surplus that will fall to capital and labor
respectively. In case the business has suffered losses, it might
perhaps be both wise and just to recoup those losses out of the
profits of following years. All these details are open to
equitable adjustment at the start, or to arbitration as cases of
disagreement arise ; "but the great thing is to get the workman
to feel that he is working for himself and has something to hope
for as the result of his skill and diligence.

§ 155. Another modification of the principle of cooperation
is that introduced in Germany by Schulze-Delitzch. In that
country industry is not so generally organized on the grand
scale as is common in England, France and America; a great
part of their workshops are very small establishments, often
managed by a single family. If these were to have their
materials at the lowest price they must buy them at wholesale to
save commissions ; to this end there were organized raw material
associations, that they might combine their capital for such pur-
chases. Then came the establishment of public bazaars by these
or similar associations, for the sale of their wares. But it was
fouud that these workmen had but little capital and no credit;
they could offer no sufficient security to induce the banks to
lend them even the small sums that they needed ; for a working-
man's capital is his health and strength, and his death or serious
illness destroys it. But if the single workingman has no credit,



154 SOCIAL SCIENCE AND NATIONAL ECONOMY.

a large body of them organized on the principle of mutual
security would have credit enough ; if one or a few died or were
ill the rest would be the bank's security. Associations were
therefore formed to establish loan banks or people's banks, as
they are variously called ; and these banks make advances to
their shareholders on such terms as put them on an equality with
the rich.

The movement began in 1850. In 1S72, after twenty-two years of slow
and steady growth, there were 442 associations for purchase of raw
materials and sale of wares; 2220 banks to make advances to workmen.
Of these banks, 807 reported 372,742 members; loans, 359,519,200 thalers;
capital, 21,373,529 thalers; deposits and borrowed capital, 77,188,731
thalers. (A thaler is seventy-two and a half cents.) This group of
banks is connected with a central bank, which negotiates loans for them
in the money market.

§ 156. The question of the rate at which woman's labor
should be paid, and of tbe employments that should be open to
her, is one of the living issues of our time, and must not be
passed over.

The rate at which she is paid is often alleged as an instance of
the power of custom, and unjust custom at that. For doing
exactly the same sort of work, it is said, and doing it quite as
well, she receives far less pay than a man does. Custom, no
doubt, has its influence here ; the more rapid advance of woman's
rate of pay seems to indicate as much. But there is reason as
well as custom for the difference.

(1) Men are more steady workmen than women are. The
latter, rightly or wrongly, all but a small minority, look forward
to marriage and the care of a household as their true career.
For this reason they do not concentrate their attention upon
their calling with the same singleness of eye as men show.
Nor have they, as a rule, the same power of continuous applica-
tion, although they have far more natural quickness. The
superintendent of the Elgin Watch Factory told me that the
women employed there learnt far more during their first fort-
night than men did; but there they stopped, while the men
went on learning all their lives.



woman's work and wages. 155

(2) Through the limitation of the number of employments
open to women, they are driven to underbid each other for work.
By " employments open to women " are meant those that their
prejudices will allow them to enter, not merely those that are
fit for their sex to undertake. The position of household ser-
vant, for instance, is one that very few American-born white
women will now accept. Nor is it of any use to argue the ques-
tion, or to hold up the example of a few ladies of high culture
and slender purse; the position of direct control by an indi-
vidual will, that is bound by no rules save such as it extemporizes
from time to time, is become intolerable to them. They fly from
it to the store, the factory, the school-room, and finding all these
insufficient, they will sew for slop-shops and die of slow starva-
tion rather than go to the kitchen. German and Irish women,
and Chinese men are the only material to be had to fill these
vacancies, to the varied discomfort of the mistresses of the
households.

The plan of cooperative housekeeping in cities and towns
offers a solution of the difficulty. By this, cooking would be
conducted in a large central establishment, under the manage-
ment of superior chefs, and the purchases made by experienced
caterers under the direction of a committee of housekeepers.
This change would be in the same line as that which removed
the work of spinning and weaving from the list of household
duties ; it would cheapen living to both rich and poor, by
enabling wholesale purchases ; it would give an opportunity for
the application of scientific principles to the art of cooking; and
it would furnish congenial and well-paid work to a large per-
centage of the women now out of employment. Nor would it
be impossible to apply the same cooperative principle to other
parts of household work, and relieve the mistress of the family
from the necessity of depending on the services of a class, who
— with some exceptions — are certainly not improved and human-
ized by their position.



156 SOCIAL SCIENCE AND NATIONAL ECONOMY.



CHAPTER EIGHTH.
The Science and Economy op Money.

§ 157. The progress of society from slavery and poverty and
isolation to freedom, wealth and association, involves not only a
progressive differentiation of its members and of their functions,
but also a constantly increasing interchange of services between
these. The more developed the society, the greater the inter-
dependence of its members, and the more numerous and rapid
these exchanges. With the solitary backwoodsman they have
no existence, and he must overcome nature's resistance and
master her utilities unaided. But when the country begins to
be settled, these exchanges begin ; if a town spring up, they
become more numerous andrapid; if the town grow into a city,
the system of mutual service becomes complete.

These exchanges are at first effected by barter, or the direct
exchange of commodity for commodity. But a little experience
shows this process to be both awkward and wasteful. The
artisan might waste more time than he spent to produce his
commodity, in searching for a customer whose wants and pos-
sessions were the exact complement of his own. "Where a single
article that varied in the value of its parts, such as the carcass
of a cow, had to be divided among a great number of customers,
the adjustment of values was nearly impossible. This led to
the setting apart some one commodity which should be the
representative of all estimable values, and should be the instru-
ment of these exchanges and therefore of human association for
mutual help. Cattle (pecus), being the first form of personal
property {peculium or chattels), was first used as money (peciinia).
Afterwards silver, and probably somewhat later gold came into
use. The scarcity of these precious metals, and their eminent
fitness for making ornaments, had, doubtless, brought them into
general demand and caused them to be held at a very high price.
The transition to their use as money was gradual and natural. It



COINED AND UNCOINED MONEY. 157

is impossible to trace the early history of their adoption. The
oldest historical records tells us that they were already in use,
though not yet coined, in the patriarchal age, — that is, at a time
when the family was still the largest social unit among peoples that
afterwards played a part in ancient history. The first coins were
in the form of animals, as indicating that they were substitutes
for cattle. Afterwards they were coined in small, flat masses of
equal weight and a recognised degree of purity, with an image
and superscription, which now give these pieces a great historical
interest.

People who believe that the world ought to confine itself to this primi-
tive sort of money sometimes strive to see something especially divine in
gold and silver. They have called them " the money of God and of De-
mocracy," " the natural medium of exchange," and have alleged that
they have "a universal attraction for man, superior to that felt for any
other kind of merchandise." A step farther would bring us to the rhap-
sodies of the alchemists.

The right to coin money is now regarded as an appanage of
sovereign power ; though at the period of the incursion of the
Germanic tribes into the Roman empire, it was imposed as a
duty on the conquered cities. Governments have at various
times inflicted great injury by debasing the current coin, with-
out any ultimate gain to their treasury. The presence of an
inferior coinage drives the superior out of circulation, for as
soon as the value of the latter as bullion exceeds its legal value
as coin, it is withdrawn from circulation and hoarded. Similar
are the effects of trying to fix the comparative value of gold and
silver at other than the market rates. Thus the law of 1817,
that made the guinea worth twenty-one shillings in silver, drove
the latter out of England ; and a similar law drove gold out of
France.

The scale and weights came into use again through the governments
contiuually tampering with the weight of the coinage and through the
rogueries of sweaters and clippers. When we hear that one king of
France, John the Good, changed the weight of the lime seventy-one
times in nine years, we know why the mediajval merchant carried a pair
of scales at his girdle. In the sixteenth century the merchants of Ham-
burg fixed a standard of weight and purity for an ideal coinage, called



158 SOCIAL SCIENCE AND POLITICAL ECONOMY.

"money of account," into which they translated all the coin deposited
in their city bank, according to its weight and purity.

§ 158. The adoption of any form of money as the instrument
of association and exchange was a clear advance upon barter.
In barter every commodity discharges two functions at the same
time ; it is both goods and money. In the new method of ex-
change the two functions are separated ; money and goods
become separate things. Nor is a vast amount of material
thereby withdrawn from other uses : a very small amount of
money suffices to effect a very large number of exchanges, and
no country needs anything like as much money as it has pro-
perty ; it might as well have wagons and railroad carriages
enough to convey all its movables at once. Very much of its
property never changes hands, except by inheritance; a still
larger amount not once in a long series of years. At most a very
small amount changes hands in the course of a single day, and
there is no use for as much money as will represent this amount.
The same sum (be it coin, or notes, or credit represented by a
check) may be used repeatedly in the same day, and thus dis-
charge many times its own amount of indebtedness. The most
perfect money is that which changes hands with greatest
rapidity ; the more rapid its circulation the greater its useful-
ness. " The proportion borne by money to commerce decreases
in advancing societies" (Carey), and by consequence its rate of
interest, or the price paid for the use of money, fulls with every
advance in its usefulness. Brutus got fifty per cent, a year;
Rothschild will lend at four.

The precious metals have many qualities that fit them for use
as coined money. They are not liable to rust; they are easily
alloyed with baser metals and as easily separated ; they receive
a stamped impression easily and retain it firmly; they are not
easily worn or abraded ; they are readily distinguished from
other metals. Their defects are their weight, their intrinsic value
as commodities, and hence the real loss of value by such abra-
sions as they suffer. So long as we use as money what possesses
a very considerable value for other purposes, and is liable to be



VALUE OF THE PRECIOUS METALS. 159

diverted to other uses, we cannot be said to have attained the
complete separation of the function of money from that of com-
modities.

That these metals should be used at all as money is a matter
of convention or general agreement merely. But that conven-
tion once established, their value in circulation, like all other



Online LibraryRobert Ellis ThompsonSocial science and national economy → online text (page 14 of 38)