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On a free and open market labor sells for its value just as eggs sell for their value on that market. When the millionaire goes to the market to buy eggs from a poor country woman the fact that he is rich and powerful and she is poor and weak does not enter into the valuation of the eggs. This is fixed by a natural law beyond the control of either, hence the millionaire has no advantage whatever in the purchase. In general the value of labor is fixed in the same way on an open market.
If the value of labor on a free and open market were determined by the relative bargaining power of the employer and employee, then the value of eggs and other things would be determined in the same way, and for the country woman who sells eggs and chickens to a rich man to obtain justice it would be necessary for her to bring along a thousand farmers to enable her to get the market price for her eggs when selling them to a millionaire. If this principle is sound no cook who hires to a rich family can hope for justice when she makes a bargain for her wages.
So effective are these natural laws in fixing values on an open market that even negro women cooks in the South have little trouble in obtaining the full value of their services in making contracts. A millionaire with all of his supposed superior bargaining power is unable to obtain the services of an average illiterate negro, cook at less than their market value.
All of us live by working and exchanging our commodities or services for the commodities or services of hundreds and thousands of others. We are fundamentally “swappers,” traders, exchangers. Money merely facilitates these exchanges, the exchange of services for services, and services for goods, and goods for services, and goods for goods. Justice demands that, in these thousands of exchanges that each of us makes every year, there must be a single standard of value, and the American single standard of value that applies to everything is that fixed by the law of demand and supply. If you introduce a second standard to be used by some and not by others somebody will be robbed. If you exchange goods with man yard for yard and you count 36 inches for a yard while he counts 30 inches he robs you.
The great majority of the American people have their services and commodities valued by the American standard fixed under the law of demand and supply. Whenever you introduce the standard of the needs of the worker in any industry in place of the American standard of values, to the extent that the new standard increases the wage earner's compensation above what it would be under the law of demand and supply he is permitted to use short weights in his exchanges and demand full weight from all who operate under the American standard. Whenever the wages of any industry or the products of any industry are pushed above the value that would be fixed by the law of demand and supply, it means that the millions of consumers working under the American standard who use the products of that industry are compelled to take the money from their pockets that they have earned in the sweat of their brows and present it as a gift to those who have not earned it, in order that they may lift this privileged group to a higher plane of compensation than the one they occupy.
Capital doesn't pay wages; employers don't pay wages; consumers always pay the wages. Under our system there can be but one fair wage and that is the wage fixed by the law of demand and supply.
Senator WHEELER. Let me ask you there: Do you think you pay the wage under the law of supply and demand when you have a protected industry?
Mr. DYER. I do not think there is any difference between the protected and unprotected industries
Senator WHEELER (interposing). You do not think there is any difference?
Mr. DYER. So far as the workers are concerned. Senator WHEELER. You do not think it makes any difference whether the woolen manufacturers in New England are protected, in the wages!
Mr. DYER. No; I think if they are protected it can not be an advantage for a long time. If it does not go one way, it goes another.
Senator WHEELER. I do not think you quite understand me. Do you think by reason of the fact that one industry has a tariff protection, that the employees get higher salaries in that industry by reason of the fact that the industry is protected?
Mr. DYER. No; they can not get any higher. If they did the others would rush in there and bring it down. You can not have a difference in the standards where it is a question of competition.
Senator WHEELER. In other words, you do not think it makes a particle of difference to the manufacturers of New England whether they have protection by high tariff, or not?
Mr. DYER. It might make this difference, they might throw the factory out altogether. But as long as the factory is going
Senator WHEELER (interposing). Oh, no, no. If you have a tariff upon woolen goods, do you or do you not believe that those who are engaged in that industry get a higher wage than they would if the industry were not protected?
Mr. DYER. If they were working in that particular industry when it was not protected, yes;'but it would not be a higher wage than they could get somewhere else.
Senator WHEELER. It would not be a higher wage than they could get somewhere else?
Mr. DYER. No; for that kind of skill.
Senator WHEELER. But here is a class of people who grow up in a certain industry and who do not do anything else, and do not know anything else but the manufacture of woolen goods, and when a tariff is put on the industry becomes more prosperous, and by reason of that fact do the laborers working in that industry get a higher wage?
Nr. DYER. I think, Senator, it is really a matter of supply and demand. If there is any boost in capital or labor it is only a matter of time that others go in and solve it.
Senator WHEELER. You do not believe that under our immigration laws, and the low standards of wages in Europe that it affects the standard of wages in America if they come in?
Mr. DYER. That is a big question, Senator, that it would take a long time on. But if you take off protection, you have to study out what it would be. It would be a lower technical wage, but cheaper goods, and so there is one against the other. It would certainly affect it.
Senator WHEELER. You do not think that any law in this country, as I read your statement, affects the wages of laborers?
Mr. DYER. Oh, yes. The Adamson law affected the wages of railroad men tremendously, and it lifts them out of the law of supply and demand and puts them on the basis of need. And I think in a lot of others where they have been taken out of the class and pushed above, and where employees by various means have pushed themselves above this wage that ordinarily obtains, that is true. But I am talking about a state of freedom of contract.
Senator WHEELER. How about the immigration law? Does not that affect the standard of wages in this country!
Mr. DYER. In general it would, yes; anything
Senator WHEELER (interposing). As a matter of fact, have not we by numerous laws affected the standard of wages of American workingmen?
Mr. DYER. Yes; I think sometimes they get an unwarranted wage, too. The Government can do all sorts of harm in that way.
Senator WHEELER. I am not asking you about the Government. I am asking as a matter of fact.
Mr. DYER. Yes; that is true, and a municipality can fix a wage away above the standard, too.
Senator WHEELER. Then, if we fix the law as you have enunciated in this document, you would do away with the immigration law and the Adamson law and the tariff law, which would raise the standard of living of the American workingmen?
Mr. DYER. No; I would not do that at all.
Senator WHEELER. You would throw them completely into competition with the cheap slave labor of some of the other countries?
Mr. DYER. That is not my theory at all. I said in the beginning that I would oppose a repeal of protection because our industry has been built upon it, and now to take it away would do more harm than good. If we had started on the other basis a hundred years ago it perhaps would be better. Sometimes when a man starts on a wrong road, sometimes it is better to keep on, hoping to get through, than to come back.
Senator WHEELER. Your theory is, if you started on the wrong road, you must keep on going?
Mr. DYER. Not in the opposite direction, but to work along, hoping to get back
Senator WHEELER. How are you going to get back?
Mr. DYER. It is just this, Senator, you have got to remember that you adopted a system of government and the people have been trained on it, and capital has been invested on it, on the basis that it is going to continue. If you change it, it may destroy and do more harm than the good you would do if you go through with it. I think that applies to protection.
Senator WHEELER. You think because of the fact that we have started on the wrong road we should keep on going, because two wrongs make a right?
Mr. DYER. No; it is not wrong in that same sense.
Senator WHEELER. You think if we have a high protective tariff we should keep on with it?
Mr. DYER. I said I was not a high protectionist. There is a good deal of argument in favor of high protection as an economist.
Senator WHEELER. You are an economist?
Senator WHEELER. That is true, but you are testifying as an expert economist; and I am not asking you what other economists thinks, but what you think, and I am asking you if you think if we started on the wrong road we can cure it by keeping on going on the wrong road?
Mr. DYER. You may not cure it, but you may do less damage than by destroying it. Senator WHEELER. You might do less damage? Mr. DYER. Yes, sir.
Senator WHEELER. So if a person starts out in life on the wrong road he should keep on going, because he might destroy himself coming back!
Mr. DYER. No; it does not mean that at all, but it means this: A man may build this house, or his store, in the wrong location, and put up a substantial house. If he finds, a few years afterwards, it is a wrong location, then it becomes a question whether tearing down and going to another location would be more profitable.
Senator WHEELER. You do not pretend to tell me as an economist that is a parallel case at all?
Mr. DYER. I think it is.
Mr. DYER (interposing). I think this, Senator, that protection puts a certain handicap on business
Senator WHEELER (interposing). What handicap does it put on it!
Mr. DYER. Well, I believe—this is just my theory, and men equally strong, or more noted, do not believe it. I do not believe in free trade. But I believe that if the country was on a basis of low tariff and would develop its industries, or had done that starting a hundred years ago, we would be better off to-day than we are. That is my opinion. But we didn't start that way. I believe that protection has been a certain handicap, but after you have based all of your institutions on it, to destroy it would bring a greater handicap than to hold it.
Senator WHEELER. You think it should be increased ?
Mr. DYER. When wages are driven above or forced below this standard by some artificial process, somebody is robbed. If the compensation of all workers were pushed up in the same proportion, nobody would be benefited. A sufficient number must be left on the American basis to contribute the charity to the privileged groups.
The compensation that any group receives in the above way over and above the wage that would be determined by the law of demand and supply is not wages but charity, and it should not be designated as wages,
The idea that employers can arbitrarily fix wages and hold wages below the standard fixed by the law of supply and demand in any
community is pure myth. There never was a time when it was so easy for working people to move from place to place as to-day. There never was a time when they were so well informed on wages throughout the country as to-day. All the States, all the cities and towns, all the industries in this country, are in sharp competition for labor, and under such conditions it is practically impossible for an employer to get his labor below the market price for any considerable length of time. Money wages may be higher in one section than another, and in one industry than another, but when living conditions and other things that the worker values over and above his money wages are considered, the difference, in large measure, disappears. It may be said that wages in general are not fixed by the employers, but they are approximately fixed by the law of demand and supply under a state of freedom.
If there is any question whether the American theory of industrial freedom will work in practice, I call your attention to the fact that American industries generally are operating successfully under this theory, and especially do I point you to the great automobile industry.
The world in all its history has never seen such efficiency in industry as has been reached in this country under American conditions of freedom in business. This is true, whether the efficiency is measured by wealth, production, or by service to the public.
There is nothing else quite so deadly to efficiency in business as unwarranted interference with freedom in management. Freedom is the greatest inspiration to efficiency.
It is difficult to exaggerate the disastrous economic effect that would in all probability result from such political control and direction of the coal industry as is proposed in this bill. In the first place, the direction of the economic process of production in private enterprises is never a proper function of government under the American system.
Senator WHEELER. You feel that we should not have had the Interstate Commerce Commission?
Mr. DYER. No; I said the economic process. I believe the Interstate Commerce Commission performs a great service, and to the extent it stays within its function it may perform a greater service; but I think when any political commission enters into the economic process of the properties it has in charge and tells them how to produce, it is entirely outside of the function of government.
Senator WHEELER. Do not you think that is what the Interstate Commerce Commission is doing?
Mr. DYER. They have been trying to do it.
Mr. DYER. The courts stopped them. I had something to do with it, too. Pardon me; but when they come to try to control the production of coal, I don't think they had the power, or the Government itself had the power, under our theory of government.
Senator WHEELER. What case have you reference to?
Mr. DYER. It is not a case. You remember a few years ago when they refused to allow the southern railroads to reduce their rates to meet other rates they were enjoined by the courts, I think. I am not a lawyer, but I remember that.