what forbearance the people in the business community generally have borne with the situation and helped the banks to deal with the emergency. With the exception of the first excitement in New York and some smaller runs in other places, there has really been surprisingly little excitement or uneasiness among the people.

The greatest hardship to business generally has been the derangement of the machinery for making collections and remittances. As can readily be seen, this has interfered with every kind and class of business and led to great curtailment of business operations of every kind. Factories have suspended, workmen have been thrown out of employment, orders have been canceled, the moving of crops has been greatly retarded and interfered with and exports have fallen off at a time of the year when they should be at their highest. Another result has been a reduction of the volume of the foreign credits available just at the time they are most needed to offset the large imports of gold which have been made.

CHAPTER XXI

MANUFACTURES, TARIFF, AND TRUSTS, 1860-1915

I. MANUFACTURES

A. Conditions of Industrial Progress, 19011

The fundamental conditions of the industrial progress of a country are here excellently stated by the Industrial Commission. This commission was created by act of Congress in 1898 for the purpose of investigating general industrial conditions. For two years they took testimony and made investigations and in 19001902 published their report in nineteen volumes. This constitutes one of our most complete and authentic records of recent industrial developments.

The increase in the manufactures and commerce of the United States during the past half century has been enormous. It is characteristic of progress in civilization, with the usual greater aggregate productive power on the part of the people which accompanies it, that manufactures, transportation, and trade should increase in greater proportion than agriculture and mining. The amount of food and other raw material required increases, for the most part, but little more rapidly than the population. If the productive power of the people, therefore, increases by a much higher ratio, labor is set free from the task of producing the raw materials, the absolute necessities of life, and may devote itself to elaborating materials so that they shall supply higher needs and appeal to more developed tastes. The employments of the world thus become more and more diversified. Because of the wonderful improvements in means of production, the same amount of labor can accomplish vastly more than it could fifty or one hundred years ago. A great variety of new products and new services, unknown to the past generations, has been introduced, and the people generally are able to enjoy products formerly accessible to the few only; and the quality of goods, even those consumed by the poorer classes, has risen greatly. . . .

Probably in no other country has the progress of the industrial system been so rapid as in the United States. A study of our economic Final Report of the Industrial Commission. (Washington, 1902), XIX, 485,

515, 518.

history shows that the introduction and improvement of machinery, and the progress in methods of industrial organization and administration, have resulted in making the individual more productive, and worth more per unit of his time; that he has therefore received continually a greater compensation; that his increased income has given him increased purchasing power, and that this gain in purchasing power has so increased the demand for manufactured articles as much more than to counterbalance the original displacement of labor by these improvements.

The fundamental elements of efficiency in industrial production, in the United States as in any country, are perhaps summed up as

I. The character of the people, as given form by race, environment, and especially by social and political influences.

2. The physical condition of the people, as determined by their food, their habits of life, and exercise.

3. The skill and efficiency of the people as tool users.

4. The quantity and productivity of tools, as determined by design and construction, and by combination of the man and the machine under all the preceding conditions.

5. The effective organization of business for economizing all productive and distributive forces.

Given a people of constitutional vigor and intelligence, with a talent for invention and construction, with political freedom and without social caste control, with a good system of education of mind and of hand, with abundance of wholesome food and a working day of proper length, with vocation and general opportunity free to all, and they will soon acquire tools and machinery, and skill in their use, and will promptly attain ability to promote their own elevation in maximum degree in minimum time. These conditions are probably at the moment illustrated in larger measure in the industrial system of the United States than in any other nation, though progress toward their fulfilment is rapid over all the civilized world. . . .

B. Growth of Manufactures, 1850-18801

A striking feature of the following tables is the tremendous leap shown by our manufacturing industries between 1860 and 1870, under the stimulus of war demand and war prices. Manufactures were highly localized in the north Atlantic and north central states and were still closely allied to the extractive industries of agriculture and mining.

1 Report on the Manufactures of the United States at the Tenth Census. (Washington, 1883), II, xi-xxi, passim.

The growth of the United States in manufacturing industry is one of the most noteworthy features of the present industrial age. It is not easy to say which is the best test of that growth; but the application of any one of the several tests, offered by the tables common to the last four censuses shows our national progress in this direction to have been remarkable.

Let us first take the figures representing the gross value of product. . . .

It is noted in another place (see introductory notes on the statistics of manufactures) that in comparisons of 1870 with 1880, on the one hand, or with 1860 on the other, it should be borne in mind that the figures for 1870 are stated in a currency which was at a great discount in gold, the average premium on gold being for the twelve months, June 1, 1869, to May 31, 1870, 25.3 per cent., which is closely equivalent to a discount on currency of 20 per cent. If then, we discount the reported values of 1870 by one-fifth, we shall have as our corrected table the following:

Again, we may inquire what has been the increase in the net value of manufactured products reported in the four successive censuses taken for the purposes of this comparison; that is, the value of the products after deduction of the value of the materials consumed: . . .

Again, we may take the figures of capital reported as invested in manufacturing industries at the successive periods under consideration, as affording a certain measure of the growth of the country in industrial power, although there is too much reason to believe that the returns of capital have always been gravely defective, for reasons which will be adverted to hereafter. Assuming, however, that the liability to omission or defective statement remained of constant force from 1850 to 1880, we should have the following progressive results: . .

Again, we may take for comparison the amount of manufacturing wages paid in each of the years 1850, 1860, 1870, and 1880: . . .

If, again, we were to take the number of hands employed as the test of the manufacturing power of the country on the several dates named, we should have the following table: