UP-TO-DATE METHODS OF PROTECTION.

Mr. Moseley himself, on the opening page of the report, says:

In my travels round the world, and more particularly in the United States, it became abundantly evident to me that as a manufacturing country America is forging ahead at a pace hardly realized by either British employer or workman. I therefore came to the conclusion that it would be necessary for the workers themselves to have some interest in these developments, and I decided to invite the secretaries of the trades unions representing the principal industries of the United Kingdom to accompany me on a tour of investigation of the industrial situation across the Atlantc. *** In my previous trips to America I had been favorably struck by the up-to-date methods of protection there, both from a business standpoint and as regards the equipment of their workshops. The manufacturers there do not hesitate to put in the very latest machinery at whatever cost, and from time to time to sacrifice large sums by scrapping the old whenever improvements are brought out. Labor-saving machinery is widely used everywhere and is encouraged by the unions and welcomed by the men, because experience has shown them that in reality machinery is their best friend. It saves the workman numerous miseries, raises his wages, tends toward a higher standard of living, and, further, rather creates work than reduces the number of hands employed. In England it has been the rule for generations past that as soon as a man earns beyond a certain amount of wages the price for his work is cut down, and he, finding that working harder and running his machine quicker brings no larger reward, slackens his efforts accordingly.

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In the United States the manufacturers rather welcome large earnings by the men so long as they themselves can make a profit, arguing that each man occupies so much space in the factory, which represents so much capital employed, and therefore that the greater the production of these men the greater must be the manufacturer's profit. The United States has advanced by leaps and bounds. She is beginning to feel the beneficial effects of the education of her masses and an enormous territory teeming with natural resources as yet but meagerly developed. At the present time the home market of the United States is so fully occupied with its own developments that the export trade has as yet been comparatively little thought of; but as time goes on and the numerous factories that are being erected all over the country come into full bearing, America is bound to become the keenest of competitors in the markets of the world. * * *

How is it that the American manufacturer can afford to pay wages 50 per cent, 100 per cent, and even more, in some instances both ways, and yet be able to successfully compete in the markets of the world? The answer is to be found in small economies which escape the ordinary eye. That the American workman earns higher wages is beyond question. As a consequence, the average married man owns the house he lives in, which not only gives him a stake in the country, but saves payment of rent, enabling him either to increase his savings or to purchase further comforts. Food is as cheap (if not cheaper) in the United States as in England, whilst general necessaries may, I think, be put on the same level. * It is generally admitted that the American workman, in consequence of labor-saving machinery and the excellence of the factory organization, does not need to put forth any greater effort in his work than is the case here, if as much. He is infinitely better paid, therefore better housed, fed, clothed, and, moreover, is much more sober.

Under such conditions he must naturally be more healthy. * * Fuel and raw material are much the same price in the United States as in Europe, and it therefore can not be claimed that she has very much advantage on this; but facilities for transport, both by rail and water, are undoubtedly better and cheaper. * In the United States one hears a great deal against "trusts" (as they are known, or what we term "large corporations"), but personally I am rather inclined to welcome these concerns, because large organizations that employ capital are best able to compete in manufactures on the most economical lines, can fearlessly raise wages within given limits, are in position to combat unhealthy competition, can provide up-to-date machinery ad libitum, can erect sanitary and well-ventilated workshops, and generally study better the comfort and well-being of the workmen than small individual manufacturers struggling against insuffcient capital and old machinery. It is in the organization of captal on the one hand and a thorough organization of labor on the other that I believe the solution of industrial problems will be found.

GREAT PROGRESS IN MANUFACTURING IN THE UNITED STATES.

The report of the Moseley Industrial Commission closes with a general statement, entitled "Progress in Manufacture in the United States at the End of the Nineteenth Century." It begins by calling attention to the fact that manufactures, which formed in 1875 but 161⁄2 per cent of the exports of domestic merchandise, formed in the period 1899-1901 291⁄2 per cent of the exports of domestic merchandise. It also calls attention to the fact that the growth of exports of manufactures from the United States from 1889 to 1901 has been much more rapid than the growth of manufactures exported from the United Kingdom, and says;

Comparison between detailed headings in the trade accounts of the two countries is probably somewhat unsafe, but some idea of the prospect of the United States becoming a greater exporter than this country-the United Kingdom-may be gathered by noticing that the values of machinery exported as well as that of the total exports of iron and steel manufactures, which were both, five years ago, less than a quarter of the corresponding values in this country, amounted at the end of the century to more than half those values.

It also calls attention to the fact that the production of pig iron grew from 4,000,000 tons, average, in 1884 and 1885, in the United States to 13,705,000 tons in 1889-1900, while that of the United Kingdom only grew from 7,614,000 tons to 9,191,000, and that the growth in production of steel in the United States was even more rapid.

It also calls attention to the growth of the tin-plate industry in the United States, saying:

Previous to 1890 the United States produced practically no tin plates and sheets, and the industry owes its existence almost wholly to the protective tariff placed upon these goods in 1890, which became operative on July 1, 1891. The growth of the industry since that date has been very remarkable and has resulted in this country (the United Kingdom) to a large extent losing its best customer. * * * Much of our loss, due to the closing of the American markets against us, has been made good by markets having been found elsewhere; but, in spite of this, the blow to the trade has been very severe.

In closing the general discussion, the report says:

Before concluding, it may be as well to suggest, briefly, the causes that have contributed to the enormous expansion of manufacturing industries in the United States. This is not the place to discuss in detail the causes which may be credited as political. That a certain proportion of the growth of the manufacturing industries of the United States is attributable to the direct action of government, and especially to the operation of the tariff, is obvious, and, indeed, has been referred to incidentally in discussing the growth of tin-plate manufacture in the United States.

A word, however, may be said as to the causes of growth which depend on the natural advantages possessed by the United States and the personal characteristics of her citizens. Under the first head come the enormous coal resources of the United States, coupled with the rich deposits of iron ore. Under the second comes a whole group of characteristics, which to a large extent evade statistical analysis. There is, first, the readiness of the manufacturer to adopt, and of the workman to accede to, the use of labor-saving devices. Allied to this is the largeness of scale, with its resultant economies, with which manufactures are conceived and carried on. For further details of this report see speech of Representative Olmsted in document "Pages from Congressional Record."

Report of the Commission of the British Iron Trade Association.

Another tribute to protection is paid by another representative commission from England which visited the United States in 1902, namely, the commissioners appointed by the British Iron Trade Association to inquire into the iron, steel, and allied industries of the United States. This commission, which visited the great iron manufacturing centers of the United States, presented an elaborate report, forming a volume of nearly 600 pages. It contains reports on all features of the iron and steel production, including the supplies of ore and coal, freights, labor conditions, hours of work, strenuousness of labor, cost of production, organization and administration in industrial affairs, transportation systems, the great corporations, and other work in iron and steel production, and many other kindred subjects. Throughout this elaborate report the writers point to the advantageous conditions existing in the United States, the higher prices paid for labor, the better conditions of the laboring men than those of their own country (England), and the wonderful prosperity which has come to the iron and steel industry in the United States, where, in the words of the secretary of the commission, Mr. J. Stephen Jeans, "In no country has protection been adopted in such a whole-souled manner. In no other country have the shibboleths of free trade been more emphatically held at arm's length."

Commenting upon the remarkable development in the United States in this industry, Mr. Jeans says:

The cost of production of iron and steel is made up of three main elements-raw materials, labor, and transportation. No one of these matters can properly be dealt with unless in relation to the others. Raw materials, however cheap and abundant, are of

little value as a basis of industrial prosperity without cheap transport and labor at a reasonable cost. Similarly, cheap labor is of little value without adequate supplies of raw materials of the right kind plus a reasonable rate of charge for transport. The interrelation of these three subjects has made it necessary to devote much space to all three of them in this report. Labor is perhaps the most fundamental of the trio, because in one form or another the ultimate cost of all commodities is mainly that of labor. the United States, paradoxical as it may appear, we have to face conditions that make at once the dearest and the cheapest labor that is probably to be found in any part of the world-dearest with respect to nominal remuneration, the cheapest with respect to industrial and economic results.

In

It is the purpose of the following pages to demonstrate how American ironmasters and engineers have been able to so discipline and apply the labor at their command as to reconcile high wages with cheap production in a degree not hitherto attained elsewhere. * * The influence of trades-unionism is not near

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ly so strong nor so aggressive in the United States as in Great Britain. * * * The almost absolute freedom of labor has been the chief instrument whereby it has won such conquests in the field of industrial economy during the last quarter of a century. In all countries industrial processes have been greatly cheapened during that period, but in America the cheapening appears to have been carried farther than anywhere else. Within that time a wire-rod roller has seen his earnings per ton reduced from $2.12 to 12 cents, and yet he earns larger wages at the lower figure, while 5 cents are paid to-day for heating billets to make wire rods against 80 cents during the period referred to. Wages, in short, are generally so good and the men have their futures so much in their own hands that they have every encouragement to do the best they can both for their employers and for themselves. The human factor and the personal equation appear to count in the United States for more than they generally do in Eruope. Workmen appear to enjoy a larger measure of independence, based on a knowledge of the fact that work is more easy to obtain than in older countries, and they are able as a rule to save money and are therefore less dependent than when living, as is not unusual in Europe, from hand to mouth, and that they are living under a political regime which is founded on democratic principles.

RELATIONS BETWEEN EMPLOYERS AND EMPLOYED.

Two features of the relations of employers and employed may be named as exercising a powerful influence on the amity of their connections: First, the encouragement and reward of workmen's inventions, and second, the readiness with which workmen of exceptional capacity can themselves become employers and capitalists. *

The vast scale of operations is a feature of American works that can not be paralleled elsewhere. The total number of hands employed at Homestead is over 7,000, and the capacity of output of steel something like 2,000,000 tons a year. One individual customer takes 1,000 tons a day of this output, and all the other operations are on a similarly colossal scale. This fact enables the management to spread the standing charges over a large output in such a manner as to bring them down to a percentage of total cost of which probably no European works has any experience. * * *

The commissioners naturally found that the influence of the corporation was almost all-pervading in certain districts, and that its future policy and its financial issues were regarded from very different aspects and with very different ideas by different observers. The United States Steel Corporation, in the opinion of the majority, has come to stay. As it controlled nearly two-thirds of the total iron ore, coke, pig iron, and steel capacities of the United States at the time of its organization, it is natural that it should be looked to as the leader of all movements of prices and wages, and the prominent part which it took in the settlement of the important labor dispute of 1901 supplied an evidence, if any were needed, that it means to use its power and influence when occasion demands that it should do so. At the same time, there is reason to believe that its power is not relatively increasing-in other words, that the production of iron and steel controlled by independent concerns, or likely to be so in the near future, is or will be greater than that at the time of the consolidation.

THE STEEL TRUST.

It is natural that both here and on the other side of the Atlantic the vast influence and the commanding position secured by the United States Steel Corporation should have induced a degree of apprehension lest smaller plants may be swamped, and both production and price become largely a matter of monopoly. This is not, however, the opinion of the best-informed and most far-seeing men with whom I have had the opportunity of discussing the situation in the United States. That private enterprise in that country is not afraid of the steel corporation is made evident by the unprecedented activity that is being displayed in the establishment of new independent plants while I write. In every part of the United States plants are entering the lists to compete against the steel corporation, and the capacity of the private plants opposed to it to-day is probably considerably greater than it was at the time it was founded, although that was only February, 1901. A recent writer has accurately noted that small plants well located and economically managed are remarkably tenacious of life. It has also been observed that the best returns on American capital during the period known as the "lean years" were not generally those of the largest enterprises, but those of a few smaller firms, and those in some cases outside the range of what are known ɛ

THE TIN PLATE INDUSTRY AND ITS DEVELOPMENT.

The British Iron and Steel Commission after its visit to the United States in 1902 devotes a chapter of its report to a discussion of the tin-plate industry in the United States, and begins by saying:

The tin-plate industry is one of the most recent in the United States and has been built up on the McKinley tariff of 1890, which levied a duty of 22 cents per pound on all tin plate imported into the country and practically caused the customs to claim as much on imports into the United States as the price of the product at works in the principality.

At the time the McKinley tariff came into force there was practically no tin plate manufactured in the United States, and the imports of that commodity ranged from 300,000 to 400,000 tons a year. In the following year the home production was only 552 tons, and the imports of British tin plates were 327,882 tons. Since then the American production has increased year by year, while the American imports have as rapidly declined. In 1900 the total American output of tin plates exceeded 400,000 tons, and the imports had fallen to only 58,000 tons, or about a sixth part of what they were in 1890.

The following table shows the British exports, American imports, and American output of tin plate for the last thirteen years:

The imports of the past three or four years have been confined almost entirely to tin plates, which are reexported in the shape of cans containing oil, fruit, fish, etc. By the terms of the Dingley law 99 per cent. of the duty originally placed on such tin plate is refunded by the Government on its reexport.

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It seems to be pretty certain from the available records that whatever "virtual monopoly" of the tin-plate trade the steel corporation may have possessed when it was founded, or whatever the amount of control exercised over the trade at an earlier date by the American Tin Plate Company, competitive concerns have increased largely and rapidly, until the twenty-six tin-plate works under the control of the steel corporation are less than one-half of the whole number. While, therefore, the action of that consolidation can not be regarded as uninfluential in the affairs of the tinplate trade, it is not likely to be all important, as it would have been while independent concerns were less numerous.

The number of completed tin-plate works in the United States at the end of 1901 was fifty-five, compared with sixty-nine in April of 1898, and the same number at the end of 1895. Hence the number of existing works at the end of 1901 was less than that of either of the two previous periods. But the amount of enterprise being shown at the end of 1901 in adding to the productive capacity of American tin-plate plants was greater than at either of those previous dates. Mr. Swank's figures show that at the end of 1901 no fewer than seven new tin-plate works were in course of construction, against one in April, 1898, and four at the end of 1895. Of the new works being built at the end of 1901, three were in Pennsylvania, two in West Virginia, one in Ohio, and one in Wisconsin, while one other was at that time projected in Illinois. aggregate capacity of the whole of the tin-plate works of the United States is not quite known, but it is computed at over 700,000 tons, which is a good deal in excess of any actual output hitherto reached in the United Kingdom.

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In considering the tariff of the United States from the point of the influence on British industry, we can not ignore the possible example that it has set to other nations and which in the future it may conceivably offer to our own. We need not discuss this point at any length. It would be unsatisfactory to attempt to discuss it from a purely controversial standpoint. But it is at least permissible to point out that not a few leading manufacturers have expressed dissatisfaction with a condition of things that enables other countries to enter British markets without let or hindrance while excluding us from their own, and under which Britain is steadily increasing her imports of foreign manufactured goods, while leading statesmen have pointed out that this country, having by its economic policy given a practical sanction to this system of unrestricted imports, has no equivalent to offer in commercial negotiations with other nations,

THE BRITISH POINT OF VIEW.

From the British point of view the main interest in and the chief effect of the United States tariff takes two forms-that of excluding our products from the markets of that country and that of underselling us in our own. As regards the former, the fact is so well known that I need not pile up figures to prove it. Suffice it to say that our total iron and steel exports to the United States are now only about one-fifth of what they were ten years ago, although even now the tariff does not entirely shut out European iron and steel, seeing that pig iron and billets are being imported from Europe while I write.

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I may here point out that while Great Britain, according to the official records of the United States, took from that country an average of more than $500,000,000 worth of merchandise during the last four years, the average imports of British produce into the United States have not exceeded one-third of that figure, while of that one-third from one-half to two-thirds are subject to more or less prohibitory duties. This is not a trade relationship which the people of this country can regard with perfect equanimity. Americans can hardly be surprised if in Great Britain there is an increasingly strong impression that in matters of commerce our American friends, like the Dutch described by Hudibras, have a habit of "giving too little, and asking too much."

EFFECT OF THE TARIFF ON PRICES.

The Americans generally dispute the argument that a tariff for protection tends to keep up prices to the home consumer, and in support of their attitude on this subject they point to the fact that the prices of coal, iron, steel, and other commodities are and have been materially lower in the United States than in Great Britain. This view opens up questions of vast range, which it would take much space to handle. The other side of the argument obviously is that prices of commodities in the United States have declined, not because but in spite of the tariff.

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At the same time it is by no means clear that a high tariff does necessarily involve a high range of prices in the protected country, and in the United States within the last few years prices have touched a very low level in spite of the tariff. Take as a case in point the statistics of steel rails. When the steel-rail industry was begun in the United States, in 1867, the rate of duty on imports was 45 per cent. ad valorem. This rate was continued until 1871, when it was made a specific duty of $28 per ton, which was reduced to $17 per ton in 1883, to $13.44 in 1890, and to $7.84 in 1894, at which figure it has since been maintained. In spite of these duties, however, the average price of steel rails in the United States fell from $28 in 1897 to $17.62 in 1898, and in the latter year the average American price was probably under the average of any other country.

EFFECT OF THE TARIFF ON INDIVIDUAL CONCERNS.

Many hold that the tariff has mainly been responsible for the great fortunes made by the typical millionaire, and the case of Mr. Andrew Carnegie is often quoted as a conclusive proof of this theory. I should not have dealt with an individual example in this connection but for the fact that it stands out so prominently in the recent history of the American iron trade as to make it almost impossible to ignore it in the consideration of this phase of the question. Moreover, I have had the privilege on more than one occasion of comparing notes with Mr. Carnegie and of knowing something more of the facts than "the man in the street"; and while I would not, of course, make use of any of the facts and figures brought to my knowledge in this way, I am quite at liberty to deal with facts that are common property in the light of the aspects thus presented.

Everyone who makes any pretensions to a knowledge of the recent history of the American iron and steel industries must be fully aware that during one of the most critical periods in its career the operations of manufacturing firms, and not the least so those engaged in the steel-rail industry, were not uniformly successful. In the years 1896-1898 the principal firms connected in the American rail industry were the Carnegie Steel Company and the Illinois Steel Company, afterwards merged in the Federal Steel Company. But it is a well-known fact that over a large part of this period the Illinois Company failed to make profits, while the Carnegie Steel Company did remarkably well. The difference of results is mainly, if not wholly, due to differences in location, resources, and administration, and it is hardly likely to be claimed that the tariff was the cause of those differences, since its influence equally affected both. No doubt in the earlier history of the rail trade profits were large, but on a relatively small product, for in 1875, when the Carnegie Company started, the total American production of steel rails was only 259,000 tons.

TRUSTS AND THE TARIFF.

In America the question has been many times raised of late whether there is not a large degree of interdependence between industrial combinations and tariff duties. On this subject the United States Industrial Commission recently reported:

"Protective tariffs do not seem to have been of special significance in the formation of industrial combinations in Europe, although in many cases the combination has been enabled to take advantage of the protective tariff in the way of securing higher prices. In free-trade England the combination movement seems