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Hence the displacement of labour was not so great or severe as in the printing trade, where the rapid adoption of type-setting machinery threw many hand-setters out of employment for a time. In the long run, however, the adoption of machinery frequently had beneficial results. It not merely enabled the world's growing demand to be met by increased production, but in the big staple industries it allowed a reduction in prices which created a largely enhanced demand, and so caused more employment than ever. Most commodities are produced with the aid of machinery to-day, and yet there is no more unemployment than was the case 150 years ago. The printing trade, for instance, after the first ill-effects of the advent of machinery, witnessed a remarkable growth. The labour cost of setting type was reduced by over two-thirds, and other machines made possible the issue of more papers and the coming of the cheap book. Far more workers are employed than before; wages are better and hours shorter, and the public has reading facilities such as otherwise would have been impossible. Similar results have come in other trades. Further, though some machine-using occupations passed more into the hands of women and semi-skilled men, new industries were created in which skill was called for and higher wages paid; machine-making, engineering, mining, and shipbuilding are comparatively new industries, products of the Industrial Revolution, and in these trades higher wages have prevailed than are found in the older occupations. Nearly every decade sees some new big industry grow up.

Machinery brought in its train an increasing division of labour. In place of four processes there might be twenty. There are forty distinct operations in making a man's linen double collar. From the point of view of producing wealth this specialization was beneficial, for each man became an expert in his own little field of work, and consequently produced more. From the human standpoint, extreme division of labour brought monotony, and the constant repetition of one small job may be as fatiguing to mind and body as strenuous manual tasks. It is doubtful, however, whether modern work is any more monotonous than was the more varied manual occupation of earlier days. The 18th century worker's incessant toil at a hand loom, spinning-wheel, or anvil, was every whit as dreary as that of his modern counterpart; often he worked in insanitary surroundings, he had to supply all the power from his own muscles, he received lower wages, and had little time, facility, or inclination for decent leisure or recreation. Modern machinery and division of labour, in spite of their drudgery, have at least made possible the eight-hour day, the Saturday half-day rest, and the occasional holiday; they have provided the newspaper, the cheap book, the excursion, and the varied forms of indoor amusement. In short, they have produced something which in a man's spare time enables him to repair the ravages of fatigue and get some enjoyment out of life.

Machinery and Skill. The effect of modern machinery upon the position of the skilled workman only became fully apparent in Europe after 1914. Theoretically the invention of an ingenious machine for any purpose would seem to sound the death-knell of skill in that particular occupation. In practice this has often happened; for example, the skilled glass-blower has been driven out by machinery in the American glass industry since 1896. But many things may combine to preserve the status of the skilled worker in some occupations. In the first place, much machinery is not fully automatic, and depends to a great extent for its efficiency upon being "minded" by a

man who understands its working and can cope with any difficulty which may arise. Hence many employers use skilled men in preference to semiskilled or unskilled workers. Secondly, the factory system, by gathering men together in crowds, made strong trade unionism possible, and the unions of engineers, carpenters, and mechanics were able to maintain the monopoly of employment for men who had gone through a long course of training. Thirdly, in Europe, the aim of most firms has been variety and quality rather than mass production, and for quality work skilled men are needed.

The war, by taking away many skilled men, and by creating a demand for immense quantities of standardized articles, made necessary the devising of more automatic machinery, the abandonment of old rules which favoured the skilled men, and the employment of every available worker. A little instruction, a few weeks' experience, and anyone could take charge of some of the new productive appliances. Knowledge as to how the machine was fed, oiled, started, and stopped in many instances took the place of the skill formerly gained by apprenticeship and long training. This new development, with its consequent dilution of labour and production of a class of semi-skilled machine operators, may influence permanently and considerably the position of the old skilled class. The great advance in the strength of trade unionism since 1914 will probably prevent such developments from reducing the level of wages, though it may not prevent the disappearance of that difference in wages rates which formerly made the skilled workers the aristocracy of labour.

Scientific Management. As we saw in the previous chapter, science has been endeavouring during the last thirty or forty years to eliminate that prodigal waste of material, power, time, and labour which characterized production during the earlier stages of the Industrial Revolution. The waste of material was met by seeking uses for by-products formerly thrown away. The treatment of coal-tar is the classic example, but others might be given. For instance, at one time all the cotton seeds extracted from the cotton pod, except those required for the next year's seed, were thrown away. To-day they are pressed, and the cotton-seed oil thereby extracted is made into many things, from imitation olive oil to margarine or soap. The husks make oil cake for cattle, fuel, and paper, while the plant itself yields various chemical products.

Scientific management proper concerns itself not with this application of chemistry, but with the formulation of principles to govern management. It has two sides-the management of things and the management of men. In its first task it seeks to establish costing systems which will show at a glance where waste is taking place, what each process costs, and which branches of production are profitable or otherwise. It endeavours to provide working conditions which will best help to get increased production, such as proper lighting, suitable temperature, adequate ventilation, etc. It studies industrial fatigue, and tries to eliminate the factors causing it. It arranges processes in such order that material flows steadily and naturally from one worker to another in the passage towards the finished article, and where the final task of a factory is the assembling of many parts-e.g., a motor car— it so arranges matters that each part arrives at the right place in the required number and allows assembling to be done quickly and continuously. It thinks the whole problem out, instead of working by rule of thumb. Modern large-scale production requires co-ordination and co-operation of the

many specialized branches; otherwise there is confusion. To provide that co-ordination is one of the chief aims of modern business management.

The second task of scientific management is the handling of men at their work. Each job is analyzed, and a time and motion study undertaken, often in a works laboratory equipped with elaborate apparatus and a cinematograph. The simplest, most economical way of performing a task is sought for, and unnecessary movements are marked out for elimination. Finally a standard time is fixed in which a task can be done, and by various methods of bonus payments workers are induced to accomplish their task in the standard time, or even less. This part of scientific management is vehemently attacked by trade unionists as a dodge for speeding-up, wagescutting, and the destruction of that standard rate of wages for which unionism fights. We shall return to this topic later, when examining the policy of trade unionism in America (Chapter XV). The first part of the scientific manager's work is not open to such an attack, for it seeks to secure the abolition of that wastefulness which is still much too common a feature of production in all its forms.

Books Recommended. Hobson, J. A., "Evolution of Modern Capitalism,'' chaps. 5, 6, 11, 12, 13; Marshall, A., "Industry and Trade'; Hirst, F. W., "The Stock Exchange'; Wilson, Woodrow, "The New Freedom"; Gide, C., "Political Economy,'' chapters on Labour and Division of Labour; Withers, H., "The Meaning of Money"; Brailsford, H., "War of Steel and Gold"; Taylor, F. W., "Principles of Scientific Management"; McKillop, A. D. & M., "Efficiency Methods''; Webb, S., "The Works Manager To-day."

CHAPTER VI.

FLUCTUATIONS IN ECONOMIC PROGRESS.

ECONOMIC progress is not steady, constant, and unbroken. It suffers from very marked fluctuations, with alternating periods of boom and depression. The former are marked by plentiful employment, increased investment and production, higher wages and prices, and a general atmosphere of optimism and enterprise. All's well with the world. These conditions give place, suddenly or gradually, to bankruptcies, unemployment, falling wages and prices, an unwillingness on the part of investors to embark on new enterprises, and a universal sense of stagnation and pessimism. The country seems to be going to the dogs. Then slowly there dawns a more hopeful tone; men venture once more on bigger things; slackness is displaced by energy, and prosperity comes round again, only to be followed by another crisis and period of depression. And so the cycle goes round-prosperity, depression, prosperity, or depression, prosperity, depression, according to one's point of view-and the economic world pursues its undulating career.

To the wage-earner the most important feature of these fluctuations is the effect on wages, prices, and the state of employment. During boom years prices rise; at the same time the increased demand for labour causes a general increase in wages. Unemployment figures fall, and there is considerable overtime for most workers. Depression, on the other hand, brings a drop in wages and prices alike, more unemployment or under-employmenti.e., short time. So far as available statistics are of any use, they indicate that unemployment in bad times is about three times as great as in periods of prosperity. In some British trade unions it has fluctuated from about 3 per cent. to 9 per cent. In New York State a rate of 9.3 per cent. in the "good" times of 1906 gave place to one of 29.7 per cent. in the black days of 1908, while the figures for Australia, which for the earlier years are admittedly unsatisfactory, show a fluctuation from 10.8 per cent. in 1896 to 4.7 per cent. in 1911.

Chief Features of Business Cycles. (1) Trade fluctuations, with their many phenomena, can be traced back to at least the 16th century. Unemployment, financial chaos, and complaints of bad trade were as well known in Stuart England as they are to-day.

(2) These ebbs and flows affect social as well as economic conditions. The curve representing the movements of foreign trade is wave-like. A similar curve represents the movements of the rate of interest, the number of new companies floated, railway activity, shipbuilding, employment, prices, wages, etc. The number of marriages varies with the state of business. The national drink and tobacco bills go up with good trade, as does also the number of police court cases due to drunkenness. On the other hand, larceny and theft became less necessary means of livelihood, and the calls on public or private charity vary in amount according to the volume of unemployment. Industrial unrest is generally most prevalent in years of good trade, for when labour is in great demand the wage-earners, faced with rising prices and conscious that their labour is urgently needed, agitate for increased rates of

pay. A similar policy is pursued by those who have capital to invest or money to lend. Since more and more capital is required, capital demands In bad times capital and labour alike are less aggressive, and are satisfied to get employment on any terms.

higher wages.

(3) Depressions recur at almost regular intervals. In the 17th century a period of eight to ten years separated each crisis from its successor, and all through the 19th century depressions came every nine to eleven years. The following years saw British trade turn down-hill:-1815, 1825, 1837, 1847, 1857, 1866, 1878, 1885, 1893. In the present century depressions came in 1904, 1908, and 1920, but two of these were the back-wash of war, and were thus due to extra-economic causes in part. From the facts just given, economists have coined a phrase the periodicity of crises or depressions— by which we mean that the rotation from depression through prosperity back to depression takes generally an almost uniform period.

(4) Trade fluctuations tend to be universal, and affect all countries at about the same time. This is due to the way in which international finance, foreign investments, and commercial relations are inextricably mixed up together. The world has almost become an economic organism. Hence if one member of the body suffers, all the other members suffer with it. A collapse in America affects Germany, England, and all the other countries which have trade connections with America. A serious breakdown in Great Britain is felt to the ends of the earth. This generalization is not completely or always true. For instance, the crisis of 1873, one of the worst on record, was very severe in Austria, Germany, and the U.S.A.; and yet Britain scarcely felt it at the time. Similarly, the prostration of Germany in 1901 had little effect on Britain, largely because British industry was busy supplying goods for the South African War. But these are exceptional cases. As a rule, a big crisis in one important country, like a stone dropped into a pool, sends out ripples which wash over the world, and emphasizes the financial and commercial interdependence of nations.

(5) In the past, depressions were generally preceded by a brief period of acute crisis. The financial heart seemed about to stop beating, bankruptcy stared many in the face, and the house of cards tottered before coming down. But in recent years experience and the consequent improvements in financial methods have enabled Britain and France to avert these crises. In America the banking system was until 1913 so defective as to render crises almost unavoidable. The tendency in the leading countries now is for the period of prosperity to work up to its maximum height, and then tail off steadily into slacker trade. This was evident in the gradual decline of trade from the peak of prosperity in early 1920. An old-fashioned crisis occurred in Japan in March, 1920; sixty years ago this catastrophe would have quickly precipitated similar events in America and England. Instead, it was possible to spread the decline from boom to depression over six months. Industry goes gently down the hill. Formerly it fell over the edge of a precipice. Further, it may be possible to weather a crisis and escape a depression.

Suggested Explanations. The persistent recurrence of these variations in prosperity has naturally attracted much attention, and many theories have been put forward in explanation. In 1895 one writer drew up a list of 230 different theories, and in the first 12 years of the present century at least 13 well-known economic thinkers suggested new and different explanations. Of the many theories a great number can be rejected at once. Industrial

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