The CHAIRMAN. But you must admit that the growth of such a state of things must be very slow.

Mr. SMART. Not at all; slavery was overthrown at a jump.

The CHAIRMAN. It was overthrown with a convulsion that has brought evils almost as great as slavery itself.

Mr. SMART. I do not think that the price which the nation paid for redeeming itself from that vile wrong was any too great. I do not think that it could have been too great if we had had to pay one hundred times as much.

The CHAIRMAN. But it would have been better to have paid for it in bonds and obligations instead of blood. At the same time, if it had been paid for in that way (judging by the opposition that we have had here to bondholders) the holders of those bonds would not have had a very good security.

Mr. SMART. No, sir; and, therefore, I believe that it is better for us to commence the work of effecting this transition so that the people may be, without confusion, able to adapt themselves to the new condition of things.

The CHAIRMAN. Here we have universal suffrage-for nobody proposes any restriction of it. The moment you can educate the community up to that state of things the majority will rise and establish it. But, until you have educated the community up to it, you cannot get the majority to do it. Take a farmer who, after thirty or forty years of hard labor, owns his own farm and is satisfied with its ownership, and if you propose to have him put that farm into the common stock along with some man beside him whose farm is unimproved he will tell you that he will not do it. What I say in this matter is that you have got to educate the community up to your standpoint; and when you have educated it up to that point, then you can accomplish the result through universal suffrage.

Mr. SMART. I grant that. That is exactly what interests me in this improvement. But this is a process of education, is it not? My being here is one element in it, and the work of this committee is one element in it. I say that the fact of the greenback movement having originated among the farmers out West is a proof that they are being educated very fast. When they understand that their farms are certainly passing out of their possession, do you not think that that is educating them to accept our ideas that the farms belong to the nation?

The CHAIRMAN. I am afraid that if you go to the West and propound that question you will find that they are not ready for it.

Mr. SMART. But they will be ready for it. I see that the capitalists are moving in the direction of co-operative colonies. The capitalists will go out West and establish large farms and take control of the agricultural interest in the same way as they have taken control of other interests. They will take hold of agriculture, and then what will become of the independent farmers?

The CHAIRMAN. You are only stating the tendency of all modern industry, which is concentration into few hands and under one management. The question in which we are interested is not in regard to management, because you propose a national management, but in regard to the distribution of the proceeds. Now, if by consolidation and by concentrated management the individual can get a larger share of the proceeds of industry than he can under the present isolated management, he is better off, is he not?

Mr. SMART. Yes.

The CHAIRMAN. Is the great mass of society getting a larger share of the proceeds of industry in this age than it got in previous ages? If that is shown to be the fact, the process of consolidation must be beneficial, and you may be right in saying that the consolidation of all interests in the hands of the government would be better yet. Mr. SMART. Yes, sir.

The CHAIRMAN. But you have been objecting to the concentration of capital, and yet you want to concentrate it further.

Mr. SMART. I have not proposed that.

The CHAIRMAN. Some other witnesses have.

Mr. SMART. I am in favor of developing the monopolists. I have stated so publicly, and I have acted on that principle. I buy my groceries at the big stores. I want to destroy the middle classes. Let us destroy the middle classes, and the labor question will be solved.

The CHAIRMAN. But what if the middle classes are in the majority and will not be destroyed?

Mr. SMART. The destruction of the middle classes will take the lower classes out of their trouble.

The CHAIRMAN. But if the middle classes are in a majority, how will you get rid of them? Will you level them down, or level the others up?

Mr. SMART. Level them down.

The CHAIRMAN. Then you must level all classes down.
Mr. SMART. I want to reduce the number of monopolists.

The CHAIRMAN. I thought that you said just now that you wanted to develop monopolists?

Mr. SMART. Yes; but I want to decrease their number. Developing the principle of monopoly is decreasing the number of monopolists.

The CHAIRMAN. Is that not the old idea of the Turkish and Russian Governmentsthat the head of the nation is the master of the life of everybody in the nation? Is not that exactly the development that you are aiming at?

Mr. SMART. No, sir; far from it. There will be no paternal character to the government that we propose. Every man's industry will be under his own control; and the person who directs him will be responsible to him. Under that system every man will have his wages and his share of that to which he is fairly entitled of the earnings of the year, and there will be no accumulation of capital by the nation, except what is necessary to pay off any indebtedness incurred in making the change, and except what is necessary to pay the social expenses.

The CHAIRMAN. Then you must define capital to be something different from what I have supposed it to be. I supposed capital to be accumulated wealth.

Mr. SMART. I am using the definition of some political economist, whose name I cannot mention now. But this is my definition of capital: All wealth applied productively, used for the purpose of production and distribution.

The CHAIRMAN. Then a house once built is no longer capital?

Mr. SMART. Supposing the man to have built a house for himself to live in, it is no longer capital. But if he wants to make use of it as merchandise, and to rent it to another man and take rent for it, then it is capital.

The CHAIRMAN. Under your system would you be allowed to take your accumulated earnings and build a house?

Mr. SMART. Under our system I cannot imagine a man owning a house. He cannot own a house without owning the land, and I do not believe in the right of any man to own land.

The CHAIRMAN. If a man builds a house for himself would you allow him to rent it? Mr. SMART. No, sir.

The CHAIRMAN. But if he does not occupy it himself, then it would stand idle?

Mr. SMART. The house would undoubtedly stand idle. The moment you allow a person to make use of any wealth that he possesses (even if it be the savings of a workman), that moment the man commences to be a predatory individual.

The CHAIRMAN. I think I understand your position. You have made it very clear. Is there anything that wish you to add?

Mr. SMART. No, sir.

VIEWS OF PROF. W. G. SUMNER, OF NEW HAVEN.

NEW YORK, August 22, 1878.

Mr. SUMNER appeared before the committee by invitation.

By the CHAIRMAN:

Question. Please to state your occupation.-Answer. I am professor of political and social science in Yale College.

Q. How long have you held that position?-A. I have been in that chair for six years.

Q. Of course, you have made the relations of capital and labor a study in the performance of your regular duties?-A. Yes, sir; that is my professional duty.

Q. Have you given any special attention to the condition of labor and of business generally at the present time in the United States?-A. That is within the range of my professional studies. I have studied it and given all the attention I could to it, and I have availed myself of all the means that I know of for forming ideas about it. I should like to say that the means of forming ideas about it on the part of professional economists are very meager and unsatisfactory. It is exceedingly difficult for any person, however well trained he may be, to embrace this whole subject of the causes of the present depression in the United States; and he would be a very bold man indeed who should claim that he had sounded the whole question. I am certainly not in that position before this committee. I should think that that question ought to be carefully considered in two different points of view. There has been very great industrial reaction over the whole world during the last five or six years, and the United States have, of course, participated in the general state of industry and commerce over the whole world. They have had their share of it. There have been other local and peculiar circumstances in the United States which should be considered by themselves as combining with and intensifying here the effects produced by general causes the world over. Now, I do not know any one in the world who has undertaken to study the whole question of the present commercial crisis over the world in all its bearings, or who has ventured to publish his opinion as to what the cause of this general depression may be, because I am sure that any professional economist would regard that

as a subject of enormous magnitude, and would be very timid about any of his conclusions in regard to it. I do not care to enter into that.

The CHAIRMAN. If a general underlying cause or set of causes can be determined, I understand you to say that their effect would be modified in the respective countries by local causes?

Mr. SUMNER. Yes, sir; I have tried to study and see what some of the general causes of this industrial reaction over the whole world may be. I will mention one or two of them in a very broad way in order to show what one's ideas of them would be. Within the last ten or fifteen years there has been a wonderful change in transportation and communication over the world. The Suez Canal and the Pacific Railroad, and the extension of telegraph cables all over the world, have produced nothing less than a revolution in commerce and industry. Large stocks of goods are no longer necessary to be kept on hand in any country when you can telegraph for new supplies from the other side of the world, and can get them within a short period—not as formerly when communications were slower and transportation much more difficult. That, I suppose, is one reason for the phenomenon which a great many people call over-production.

The CHAIRMAN. Your idea is that the world is now able to draw upon the accumulated stocks which it had before the introduction of the new agencies of transportation and communication.

Mr. SUMNER. Not exactly. For instance, when it was necessary to send a ship to Brazil with a letter to order some coffee, and when it was necessary to wait for the ship to come back with its supply of coffee, and you could not have the coffee in less than a month, it required a month's supply of coffee to be kept in the United States; but now anybody can communicate with Brazil in an indefinitely short space of time, and it requires but two weeks for a new stock of coffee to be brought forward, so that it is not necessary to keep on hand in this country more than two weeks' stock of coffee. So, too, in regard to the commerce between Great Britain and India. The opening of the Suez Canal and the laying down of telegraphic cables have made a complete revolution in the commerce between India and England; and the supplies of goods which were formerly warehoused (and the capital invested in them lying idle for the time being) do not need now to be nearly so large as formerly. That is an immense improvement, of course, because it is a saving in interest on a large amount of capital.

The CHAIRMAN. Would that account also for the glut of capital?

Mr. SUMNER. Yes; for the time being there may be a proportionate glut of capital on the market. That is just one idea as to what forces have been at work, particularly within the last ten years, starting trade through new currents, and bringing about new methods of business, the temporary consequences of which must, of course, be irksome until people have adjusted themselves to the new order of things.

The CHAIRMAN. What is your idea as to the duration of the causes you have just named?

Mr. SUMNER. It will adjust itself in a very few years; and the nation whose people are the most energetic and quickest in catching new ideas and developing them will lead off in obtaining the advantage. The English have profited by it very largely already, and we ought to.

The CHAIRMAN. I suppose that the time for adjustment would be affected by the fact that the first effect of a glut of capital or goods is to stop production, and the machinery is not set in motion until the demand begins to exceed the supply; that determines the time.

Mr. SUMNER. Quite so. There was an illustration of that in the matter of the Suez Canal. People were very much astonished to remark, after the Suez Canal was opened a short time, that it did not have anything like the business which it had at first. They were very much disappointed, and thought that it was going to be a failure; but there was some reason for that. Suppose that the stock of Indian goods on the European market was such as had been customary up to the time the canal was opened; now, the moment the canal is opened, people begin to bring goods from India which come right upon the top of the old stock which was on the market, and for the time being there is a glut and a crisis in the whole trade, so much so as to check and stop the new supply from coming through the canal. It did check business through the canal until these stocks were worked off and the thing began over again on a new basis, and with a regularity which is adjusted to the new times and to the new facil ities for getting supplies from India.

The CHAIRMAN. As a matter of fact, has the business of the Suez Canal recovered itself since then and gone on increasing?

Mr. SUMNER. Quite so.

Mr. RICE. After the adjustment is reached, what then is the effect?

Mr. SUMNER. A great improvement in wealth and prosperity.

Mr. RICE. The new demands create a large field of supply?

Mr. SUMNER. Yes.

Mr. RICE. So that the depression is temporary?

Mr. SUMNER. Quite so; purely temporary. Shall I mention another suggestion in that same connection?

The CHAIRMAN. We wish you would do so, and do not feel at all constrained in regard to time. Our object is to go over the whole ground very thoroughly with you, in order to save the necessity of calling other witnesses on the same points.

Mr. SUMNER. I wish you would call the others. Some of them know more about it than I do.

The CHAIRMAN. Having got you, we propose to make the most of you.

Mr. SUMNER. There is one other point which is very interesting indeed-in regard to machinery. If you introduce machinery into any business, the first effect of it is to destroy capital always, and to displace labor, and to lock up circulating capital. That is the first effect of any single machine. It is the inevitable penalty which the human race has to pay for all the improvements that it makes. If anybody invents a new loom for weaving cotton cloth, a man who has old-fashioned looms which do not work as well and cannot compete with it has to sacrifice them. If a new railroad is built, the canals and stage-coach lines are ruined. That is what we have got to pay for our gains all the way along. Within the last quarter of a century there has been au immense introduction of machinery in all departments, chiefly in manufacturing. But machinery has reached into all sorts of other things besides. If you take the accumulated effects of the introduction of machinery in all the different departments of industry, you will find that all of them involve temporary loss and injury, as men reckon it; and I have been inclined to regard that as another possible factor in this world-wide reaction-a temporary set-back that comes from the accumulated effect of these machines, all of them invading different industries. Before any one of them has had time to exhaust its effects and to pass away, another one comes on top of that, and then another one crosses the track of it, and so on in endless combinations and accumulations. The effect of this again would be that the world would have to undergo its period of reaction and reverses, but it will follow (if the idea is correct) that the analogy would hold also farther on, and that the world was about to enter on a period of expanded wealth and prosperity and of increased comfort, of which probably we have no conception at this time.

Mr. RICE. Will that reach the manual laborers of the present time ?

Mr. SUMNER. Yes; it will reach them and reach everybody, for the ultimate effect of machinery is to cheapen luxuries. That is all that it amounts to.

Mr. RICE. Does the poor man have more of those luxuries now than he had twentyfive years ago?

Mr. SUMNER. Unquestionably. Compare the condition of an agricultural laborer in any country now with what it was a century ago, or that of a man belonging to the operative classes. If you went into his house a century ago, you found that he lived in one or two rooms in a small, ill-ventilated, and unhealthy house, with no sanitary comforts or conveniences, no abundance of fuel, no good means of lighting the house, no good means of cooking his meals. But if you go into the house of a man of the same class to-day, you find that he has larger apartments, a larger number of rooms; that he has good and convenient furniture; has some supply of reading-matter; he has good clothes for himself, his wife, and children; his house at night is well lighted; his fuel cheap and abundant. And so on with all the comforts of life. And that is the only thing you can ever measure prosperity by-the good things that a man has to enjoy. The effect of all the machinery invented during the last century has been simply to cheapen these luxuries and to bring them within the reach of the poorest classes of people.

Mr. RICE. What is the effect of machinery on those laborers whom for the time being it turns out of employment?

Mr. SUMNER. For the time being they suffer, of course, a loss of income and a loss of comfort. There are plenty of people in the United States to-day whose fathers were displaced from their labor in some of the old countries by the introduction of machinery, and who suffered very great poverty, and who were forced to emigrate to this country by the pressure of necessity, poverty, and famine. When they came to this country they entered on a new soil and a new system of industry, and their children to-day may look back on the temporary distress through which their parents went as a great family blesssing.

Mr. RICE. But the fathers had to suffer from it?

Mr. SUMNER. They had to suffer from it.

Mr. RICE. Is there any way to help it?

Mr. SUMNER. Not at all. There is no way on this earth to help it. The only way is to meet it bravely, go ahead, make the best of circumstances; and if you cannot go on in the way you were going, try another way, and still another, until you work yourself out as an individual.

The CHAIRMAN. Your idea is that the introduction of machinery has improved the condition of a great many people, although individuals have had hard times in the transition?

Mr. SUMNER. Individuals and classes have had to go through it. What is the reason anybody ever came to America originally? A few came because they had some religious ideas which they wanted to carry out, but they were an insignificant part of the migration to America. The people who came to America came because they were uncomfortable in the old countries, because there was distress and pressure upon them, because they were mostly at the bottom and worst off, and the chance for them was to get to a new soil where it would be easier to get a living and to struggle forward. That is what they all came to this country for. They never abandoned their old homes because they liked to do so. They disliked it very much.

Mr. RICE. Then the pressure of necessity is one of the prime elements in the progress and civilization of mankind?

Mr. SUMNER. Yes; we have been forced to progress, and that is the reason why we have made it.

Mr. RICE. The poor laborers of America who came from Ireland; how did it happen that they came here, and what has been the result?

Mr. SUMNER. They never came until they were starving at home. The population of Ireland in 1840 was about eight millions. They were told often enough by people who wrote books that they were going to have a great famine in Ireland, that they were depending upon the potato food, and that if the potato food ever failed them (it being cheaper than wheat food) they would not be able to buy wheat food, and that they would have a great famine and would perish. In 1846-47 the famine came, and it was then, after thousands of people had perished a most miserable death, that others began to go away, and the population of Ireland fell to about five or six millions.

Mr. RICE. Is the condition of the poorest who came here from Ireland better than it was there?

Mr. SUMNER. Yes; there is no comparison to be made at all on that point. I think you can safely ask the first Irishman you meet how the fact is in his case, and he will tell you so.

The CHAIRMAN. And how did the emigration affect Ireland itself as to leaving it in a better or worse condition?

Mr. SUMNER. It affected it for the better. Ireland to-day is in a prosperous condition. They have been forced, of course, also to undertake new development of industry, cattle-raising, for instance, dairy farming, &c., instead of having the whole island divided up into little potato patches. The result of it has been the introduction of the best industrial system, and, of course, with the reduction of population, those who are left have been able to do better. All the information that I get in English documents goes to show that Ireland is vastly improved in its economic condition.

The CHAIRMAN. Besides the famine, has there not been an improved legislation in reference to land tenure in Ireland?

Mr. SUMNER. Yes.

The CHAIRMAN. And that, of course, has had its effect.

Mr. SUMNER. The famine, of course, forced attention to the bad condition of legislation.

The CHAIRMAN. To the unscientific condition of land-holding there; and Parliament took it in hand and modified the land tenure?

Mr. SUMNER. Yes, sir; the English legislation has been apparently controlled by the desire to do right, and to remove grievances where they existed.

The CHAIRMAN. In that new legislation the old idea of vested rights in the land (due to the past legislation) was disregarded, and new elements were introduced. The government took the land and dealt with it as it thought best for the interests of the people.

Mr. SUMNER. I should not say that.

The CHAIRMAN. How far did Parliament go in that direction?

Mr. SUMNER. Simply so far as to guarantee the tenant the return of all the capital which he had invested in the land.

The CHAIRMAN. But how far did the incumbered-estates bill touch the question of

title?

Mr. SUMNER. The incumbered-estates bill simply allowed people who had entailed estates which were covered with mortgages, which estates they could not sell, and were merely the nominal owners of, to liquidate and wind up their estates. The CHAIRMAN. It cut off the entail absolutely?

Mr. SUMNER. Yes, sir.

The CHAIRMAN. In other words, Parliament took it in hand and cut off what had grown to be an abuse?

Mr. SUMNER. The owners of estates that were under entail were the most benefited by the law. The men who were the nominal owners of great estates, but which were mortgaged for their full value, were the men most benefited by the law which enabled them to get rid of the entail, and to sell their estates.

The CHAIRMAN. In your judgment there may be evils which are due to bad legis