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lation, or to legislation which has become unsuitable owing to the growth and progress of things, and which can be repaired by better legislation or by the repeal of existing legislation that no longer suits the existing condition of society.
Mr. SUMNER. There is much of that kind of legislation. With regard to the general causes of this reaction all over the world, there is just one thing further that I would say. There was the Franco-Prussian war of 1871. The Franco-Prussian war, of course, turned vast numbers of people in Germany and France away from productive industries and set them to destroying. In the mean time the English got a large part of the trade and industries which those nations ought to have been carrying on. The consequence was, in the first place, that England in 1870, 1871, and 1872 had a period of the very highest prosperity. The London Economist during that period used to speak of it week by week as something entirely unexampled-the period of prosperity that they were going through. In regard to Germany, she got her thousand million dollars of indemnity from France when the war was over, and had to find out some way to dispose of it. She found that she could not dispose of it without producing a period of speculation and inflation, and Germany went through a grand kiteflying period until the crisis of 1873 came, and she has had a period of distress since then, perhaps worse than that of any other country. In France, on the other hand, when the war was over, and France was beaten, and had all this money to pay, the French people were forced to economy, they were forced to self-denial, partly by heavy taxation, and were prevented from entering into any kite-flying at all, and France, therefore, has never had that period of inflation which these other countries went through about that time.
The CHAIRMAX. Nevertheless, I suppose that France has had a period of suffering.
Mr. SUMNER. The French do not complain. There never has been any declaration of trouble in France, except in May, 1877, when they had a political crisis there, and when McMahon dissolved the Assembly.
The CHAIRMAX. Are you aware that a commission of the French House of Peers has been sitting for the last six months on the question of how to prevent distress in France, and has just made its final report?
Mr. SUMNER. Yes; and that commission was started at the time this political difficulty was on, and, as I understood it, was started for a political purpose.
The CHAIRMAX. Have you seen its report?
The CHAIRMAN, I have just received a copy of it, and it does not confirm your view of the fact. It recites very great distress through all the manufacturing region of France, and especially in the silk industry. While there was no era of speculation there, there has been an era of very great distress among the working people of France since the period of the German war and up to the present time.
Mr. SUMNER. That, of course, I will not dispute with you.
The CHAIRMAN. I do not want to contradict your statements, but we want to get at facts. I was in France last year for two months, making pretty careful examination into the causes of distress, and I found out that industries in France were depressed, not so much as in Germany, but very seriously depressed, and, on the whole, I thought
much as in England. Mr. SUMNER. France bas had a commission also sitting for the revision of the treaty of commerce with England; and when a committee is in session that is considering the question of tariff you can always depend upon having a crop of complaints about depression in business. Now that you speak of it, I was aware that the manufacturers of France had come before that commission and had made very doleful complaints indeed; but I discount such complaints.
The CHAIRMAN. As to the iron business, its condition in France is exactly the same as it is in England and in Germany and in this country. There is a very much reduced demand for iron, and a very great lack of employment among the persons engaged in that business. There are no profits to be made out of it, and iron-works are carried on at a loss. Therefore the representatives of iron manufacturers, as to that trade, had nothing to do with the revision of the tariff. The same thing is also true in EngLand. where the tariff question is not up at all.
Mr. SUMNER. I understand so. Indeed, I was going to refer to that as an illustration in the line of thought that I am now pursuing. During this period of prosperity in England capital was being very largely accumulated there—very rapidly accumulated. It was a subject of common remark that capital was being accumulated so rapidly that ope consequence was that capitalists went lending their money to all the doubtful countries all over the world; and they met an immense loss in that way. Another consequence was that English capital was employed in building railroads and gas-works and water-works and public improvements of every kind in South America, Australia, and India. In those countries, and indeed all over the world, there was a vast extension of investment of English capital. Now, whenever we have in our day an extension of industries and new enterprises opening on every side, it is obvions that allthese enterprises come back to a demand for coal and iron. The English market was the chief one, of course, on which that new demand was precipitated, and the only way that England could meet it was by working its mines deeper in the earth or by working interior mines which, up to that time, had been neglected. The consequence of that was a sudden and very extraordinary advance in the prices of coal and iron in 1872. Now, when the prices of coal and iron advance, then there comes another consequence, and that is, that those enterprises which have been projected and begun cannot be any longer carried on when coal and iron cost so much more. It cut them off and made a great many of them unprofitable. It made a great many which had been begun impossible, and it produced a reaction which was felt, particularly in England. I throw that out again only as another suggestion of one of the great movements which have been going on, and which, perhaps, may explain the state of things the world over. I should like to say there (before I get beyond it) that if the United States had been free in its commerce and industry in 1872, when that advance of coal and iron took place, they might have entered into the coal and iron trade of the world.
The CHAIRMAN. You mean that we might have competed with Great Britain ? Mr. SUMNER. Yes. Take a map of the world and look at the British Isles and see the coal and iron mines of those islands that have been supplying the world for centuries. They are now being exhausted or are running low; and if you ask yourself where on earth is the next great supply of coal and iron to be found, you will have to put your finger on Pennsylvania.
The CHAIRMAN. Inasmuch as you had all this era of great expansion and demand for coal and iron, the United States were not able to get up to its own supply and never imported so largely of iron from England, how could the United States have entered into competition with Great Britain
Mr. SUMNER. If the United States had been on a free basis, we could have made iron so much more cheaply here than anywhere else and could bring coal to the seaboard so much more cheaply, then we would have seen the labor of the United States turning into that channel and the trade running the other way.
The CHAIRMAN. The United States did turn in and double its production of coal and iron in that era, and still it was unable to supply its local demands; and, inasmuch as there was an enormous profit in it, there could not have been any more turned into it than there was. Mr. SUMNER. It went on until the reaction came the next year,
The CHAIRMAN. But the reaction came, you say, because these enterprises collapsed. That, of course, would have affected us just as much as it affected Great Britain.
Mr. SUMNER. Yon would not have had any collapse or set-back in coal or iron if, instead of going deeper into the English mines and seeking a more expensive sonrce of supply, you had been able to turn naturally and easily to the next great supply of coal and iron, Pennsylvania.
The CHAIRMAN. But you are aware that it takes time to build iron-works and to get them in operation and to get the product into the market. Mr. SUMNER. Very likely.
The CHAIRMAN. And during that time speculation advanced, prices rose very rapidly, and the collapse followed. As a matter of fact, the great increase of ironworks in the United States in the period of 1872-73 did not get into operation until after the collapse caine, and then the owners were all ruined.
Mr. SUMNER. Yes.
The CHAIRMAN. Under that state of things I do not see that your proposition is sound that the United States could have gone into the markets of the world at that time in competition with Great Britain in coal and iron.
Mr. SUMNER. If the United States had been on a free basis before 1872, that demand would not have been precipitated all at once; but, in proportion as the old supply of coal and iron ran lower, and the product got dearer, the consumers of coal and iron would have turned to their next resource and their best resource, and the trade in this country would have developed itself in a natural, normal, and steady way. It is quite possible that we might have exported a great amount of iron ore from this country.
The CHAIRMAX. Do you not know that we are importers of iron ore and not exporters!
Mr. SUMNER. Very likely we are the importers of particular kinds of ore that are needed for particular kinds of manufacture.
The CHAIRMAN. Do you not know that the ore which we could export as being near to the seaboard is not the ore that is wanted in the world? Mr. SUMNER. Perhaps that is so
The CHAIRMAN. The kind of ore that the world wants is the ore produced on Lake Superior.
Mr. SUMNER. It is simply a question of transportation. A man who wants iron can get it by going deeper in the mines of Great Britain, or he can get it on the surface by going to Lake Superior for it and transporting it to the seaboard. It is a simple business question for himself to settle where he can get it cheapest.
The CHAIRMAX. But as a matter of fact the iron can still be produced in Great Britain at less cost of labor than in the United States. How, then, can the United States compete with Great Britain !
Mr. SUMNER. The cost of a day's labor has nothing to do with it. The CHAIRMAN. What does determine the cost of iron 1 Mr. SUMNER. All sorts of figures enter into the cost of iron. You cannot measure it at one place against another by so many days' labor on this side and so many days' labor on that side.
The CHAIRMAN. If the English produce a ton of pig-iron with less days' labor than we do, and if their capital is cheaper than ours, how can we sell pig-iron in competition with them?
Mr. SCMNER. It does not follow that you could not. You may have any number of facilities other than the mere consideration of labor entering into the question. It is very true that the case in point is one where labor is a very large element.
The CHAIRMAN. I only know two elements that enter into the production of pigiron, and they are labor and capital. Suppose that in the United States a thousand men produce a thousand tons of pig-iron in a given time, and that in England a thonsand men produce fifteen hundred tons of pig-iron in a given time, and suppose that in England capital pays only 5 per cent. and here pays 7 or 8 per cent., would not the English be able to undersell us in the markets of the world, assuming transportation to be equally cheap ?
Mr. SUMNER. Not even then, although allow me to say that when I differed from you before I did not understand you; and when you attempt to reduce efficiency of labor to a factor of days' labor, and to estimate it as so many days' labor, I cannot de that.
The CHAIRMAX. I mean efficiency of labor when I say, number of days' labor. Mr. SUMNER. I know you do, and I say that you cannot reduce efficiency of labor to so many days' labor. I should object to it simply as a form of statement; but that is not important. What I was going to say in answer to your question is this: It is very possible indeed that, in the international exchanges, if you got your iron and sold itsay in the South American market-and took certain goods back for it, you could carry on the production of iron in the United States in fair competition in that market with those Englishmen who produce iron with less days' labor and with lower capital.
The CHAIRMAN. I confess that I am unable to see it. I find a law of nature against me.
Mr. SUMNER. Excuse me. You never have had a chance to do it, because the laws of this country have never allowed you to try, and I hope you will keep pegging away in Congress until you get those laws changed so as to have a fair chance.
The CHAIRMAN. I have been pegging away to accomplish that end, but I do not see how it is going to be done. The difficulty is that Great Britain can produce her iron with a less amount of labor in a given time than we can do it, because the best we can ever hope for would be to get our labor down to the same cost as in England, measured by the amount of work done.
Mr. SUMNER. Then, if you cannot, you ought not to invest your capital in ironworks, but to do something else which would pay better. But it is by no means possible for you to reason it out, and to infer in that way that you cannot do it. It would be a thing to be tried, and then if you found you could not do it, you would take your capital into something else that would pay better. But that is so extensive a question that it is better not to go into it.
The CHAIRMAN. It is very complex and difficult. Mr. RICE. You said that, in great enterprises, we always come to the demand for iron and coal at last. Would it not be a very great disadvantage for this country to be shut out of one of those large fields of labor
Mr. SUMNER. It cannot be shut out.
Mr. RICE. You say, if we cannot produce iron in competition with Great Britain, let those who are employed in that business go to work at something else?
Mr. SUMNER. Certainly, and buy the iron. It is simply a thing to be let alone. If a man can make a thing for himself better than he can get it by producing something else and exchanging that, of course he makes it himself'; but if he finds that, by confining all his efforts to one object, he can exchange his own produce for what he wants and have a surplus besides, then he sticks to his own line of business.
The CHAIRMAN. Is not that what is going on largely in this country now? Are we not actually being driven to the production of cereals because that is the cheapest product and is the best outlet for capital?
Mr. SUMNER. Certainly; because a man in the United States (looking at him simply as a laboring animal) looks around him for the thing which his labor can be made to produce best. He has got under his foot the best soil in the world, perhaps, for the production of cotton and wheat, to say nothing of other products like tobacco and petroleum. Now, if he produces wheat, and if he exchanges his wheat for other things with those people who make the other things and who cannot produce wheat them
selves in competition with him, he obtains his maximum of good things to enjoy by turning his labor in that direction.
The CHAIRMAN. Carry that out to its logical result, and what we term diversification of industry would certainly be very much restricted.
Mr. SUMNER. It would simply adjust itself. If the people of the United States can get more iron and copper and wool, and all other good things that they enjoy by producing nothing but wheat, of course they would all run right into the production of wheat. If at any time they found that the amount of labor which it took to produce the wheat to pay for iron could be made (by turning it directly on iron) to produce more iron, they would turn into that and diversify. I can see no escape from that law.
The CHAIRMAX. What compensation would the laborer have for the inevitable reduction in the rate of wages which he had been in the habit of receiving ?
Mr. SUMNER. The United States now have but twelve persons to the square mile. As the time goes on, and more people come here and live here, and as the population runs up to twenty-five or fifty or a hundred persons to the square mile, people then will not have as good times here as they have now. Our children and grandchildren cannot have as good chances when they come to live in a thickly-populated country as we are having now.
The CHAIRMAN. Has the laborer of the United States any better times than the laborer in England ? Mr. SUMNER. Unquestionably. The CHAIRMAN. At present? Mr. SUMNER. There can be no possible question about that.
The CHAIRMAN. That is not according to my personal observation. Is the laboring class in this country to-day having as good a time and as good a subsistence as the corresponding class in England ?
Mr. SUMNER. No, I do not think they all are; but if you will ask me that question by and by, I will answer it in another connection. When we know that there are only twelve persons to the square mile in a country which is rich and fertile and abundant in all the natural sources and things that men want to enjoy, it is perfectly absurd on the face of it to say that this country is in distress. If it is, there must be some artificial hinderance and wrong. If there are only twelve persons to the square mile, what have they got to do but to go to work and get food out of the landi In Belgium they support 460 persons to the square mile, and have a considerably high degree of prosperity.
The Chairman. 'You know the food of a Belgian laborer? Mr. SUMNER. Of the lowest class of laborers! I was careful to say the average class.
The CHAIRMAN. Take the mining class in Belgium, a very good class of laborers, and how do they live?
Mr. SUMNER. They live very poorly. The CHAIRMAX. So wretchedly, that I suppose it would produce revolution here. Mr. SUMNER. I do not know what good revolution would do either in Belgium or this country.
The CHAIRMAN. In Belgium last year a revolution was started and the soldiers went and shot the laborers down.
Mr. SUMNER. That was foolish, and it is generally a pity to see people take that course. If the people are living very wretchedly there, thay have one of two things to do, either to find some way to make their labor more productive or to get out on new land. Men can stay at home and kill somebody, but that does not better things at all. You must either find some way to make your labor more efficient than it is where you are, or you must go on new soil where the same labor will be more productive.
The CHAIRMAX. You said just now that we had a sparse population on a very productive soil, and therefore that if there is distress here there must be some artificial causes for it. Do you admit that there is what you call distress among the laboring classes of this country?
Mr. SUMNER. No, sir; I do not admit any such thing. I cannot get any evidence of it. There is only one single fact before the public, so far as I know (and I have been looking for facts), with reference to the number of unemployed persons, and that is the report of Mr. Wright, of Massachusetts, in which he puts down the number of unemployed persons in that State as 28,000, men and women (21,000 men). Whatever may be said in the way of using figures one way or the other, I do not know practically of any evidence that is before the people of the United States to-day except that statement. That statement was carefully made by a trained man who understands his business in that line, and who took all the care he could to collect the data which are given to us. Now the State of Massachusetts is perhaps quite as badly off as any + State in the Union, perhaps worse off. When you go into the agricultural communiies you find that they are not in any such condition at all. If there is any State worse off than Massachusetts it is Pennsylvania, on account of the coal and iron depression, and I should not wonder if they were worse off there. But there is another thing. A vast number of these people have, of course, family connections, and those people who are supposed to be unemployed are not in a condition bordering either upon starvation or crime. They do not take to the road as tramps, they do not beg, and they do not steal; that is, they do not beg publicly. The chief centers of distress, I should think, from any observation, were the large cities. In all the large cities there are vast numbers of persons who have no regular and steady means of support, who live by irregular occupations and in nondescript ways. These people do not like to leave the cities; they will not leave the cities. In times of slack industry and commerce, of course they find it harder to get a living than at other times; and I suppose that there are in all our cities great numbers of these persons. Furthermore, I should say that this kind of distress where it exists is a great deal deeper and more widespread among clerks, salesmen, bookkeepers, office men, and all that range of occupations than among any other class.
The CHAIRMAN. What was the effect of the speculative era through which we have passed in attracting to the centers of business persons who were previously engaged in rural occupations?
Mr. SUMNER. That is what I want to come to. You will remember that I started first to give some notions as to what might help to explain the world-wide reaction, and I referred to the peculiar and local causes in this country. The local causes of depression in this country, I should say, all date from the war. Fifteen years ago we spent four years in destroying and wasting capital, and we turned hundreds of thousands, millions of men, perhaps, out of the walks of industry and set them to work at destroying; and the Southern States, which were attempting secession, were reduced pretty nearly to a wilderness. All the capital there, fixed and movable, was destroyed. I suppose that no country in modern times has been reduced to such an atter devastation in regard to capital as the Southern States were. During all that period of destruction the people of the North did not feel any particular distress from the war in their business or industry. It would be easy to go back to files of the newspapers of that day and to show how people attempted to reason it out in this way: that we had discovered some grand new system by which we could make war and destroy property and still get rich, because things were going on prosperously and men were working on contracts for the governinent (to make things for the Army to destroy), and it was believed that in some way or other we were positively getting rich.
The CHAIRMAN. That was the time when the national debt was found out to be a national blessing
Mr. SUMNER. Of course; what we were doing was issuing our notes for everything that was destroyed. It was the shifting off the actual sufferings of the war to the future. But the consequence had to come some time. We could not have that destruction of capital and property and that waste of life and industry without feeling it some time or other in self-denial. The people had got to live poorer and to work harder in order to make up for all that waste. I do not see how it can be stated more simply or clearly than it is right on the face of it, that when a nation goes to war it brings on itself burdens, self-denial, waste, misery. That is what war is, and you have got to shoulder the burden in the shape of self-denial. You have got to work and produce the thing, and then not enjoy it, but have it lost. We never underwent that suffering from the war at the time of the war; and we did not afterward until 1873. This distress through which we are now going, this reaction of industry, this crisis in commerce, is the burden and suffering of the war which we had not up to this time taken on our shoulders.
The CHAIRMAN. Eighteen hundred and sixty-seven was a period of very inactive business and very low prices. Things had got down, and there was great suffering in many branches of industry. The speculative era followed 1867, but did not begin to show itself in fact until 1869.
Mr. SUMNER. Yes; during the war we were paying out these notes. The government, when it took a barrel of flour to feed its soldiers, issued a ten-dollar promise to pay for it, promising that some time or other it would collect its taxes and pay the man who produced the barrel of flour. The people believed that when the war was over they were going to shoulder the burden and to pay up, and to call in those evidences of indebtedness which had been issued. When the war was over, the first measures that Congress took were in that direction-measures looking to the liquidation of the outstanding floating obligations of the government. During the year 1867 all about where I live, and where I had an opportunity of observing it, people were adjusting their business to that necessity, and were preparing for it. They took in sail, so to speak, and got ready all around, to go through the necessary period of endurance and self-denial. And they went on for about a year, until Congress, in February, 1868, turned back upon its tracks, and said that it would not go on in that way any longer, and postponed the payment of the debt to some other time.
The CHAIRMAX. "To a convenient season."