cause if any one was named it is almost certain that he would be discharged. For instance, here is a company's store in this city (a large one), and I know that when I was employed by the company a few years ago I had to pay $40 in that store for goods that would only cost me $28 in the town. But the evil did not come so much even from that as it did from other causes. For instance, if I worked for that company, and if I was suspended during the winter months, I could not get credit in the company's store, whereas, if I had got my pay from the company in cash and dealt with a store in town, and if I was suspended for one, or two, or three, or six months, the merchant would give me credit until I got work again. It was that failure to get credit in the companies' stores that caused so much suffering here years ago; but within the last two years two of those companies' stores have changed materially in that respect, and now they do give credit to a man who is temporarily out of employment. The CHAIRMAN. I understood that, as a rule, companies operating here did not have stores.

Mr. THOMAS. There is one company that has stores, and there are individual operators who have stores, and there are some stores in which the bosses are largely interested. The CHAIRMAN. I will call your attention to a little fact in the development of business in this country. Mr. O'Halloran testified that these large companies do not have any connection with stores. Now, gentlemen who recollect anything of the condition of the iron and coal trade in this country 25 years ago will recollect that the rule was that every operator had a store in connection with his work, and that the men employed under him always dealt in those stores. I suppose it was a rare thing for money to be paid out as wages either in coal or iron operations. The wages were all paid by traffic arrangements. Therefore, whatever progress has been made has been in the right direction, and the influence of the great companies all the time has been towards more cash and less truck. I want that fact brought out and remembered, because we ought to give the good points in regard to the companies as well as the bad points. I ean recollect the transition from the truck system to the cash system, and I know that there is more of a cash system done to-day in the United States than at any previous period.

Mr. THOMAS. The largest company that has a store here is the Lackawanna Coal and Iron Company. Two years ago this winter a man employed by an iron operator up here worked for two months, and at the end of the two months he received a notice that unless he traded in the store he must find work elsewhere. At the end of the third month he was again informed that he must trade in that store or else he would be discharged. I saw myself the notice that was sent to him. It was on a printed form an 1 the blanks were filled up. At the end of the fourth month he was discharged from the works.

The CHAIRMAN. In New Jersey there is a law which prohibits that sort of thing. I do not know whether there is such a law here.

Mr. THOMAS. There is not.

The CHAIRMAN. These matters are, of course, all matters within the jurisdiction of the State and not within the jurisdiction of the general government. Are there any suggestions that you can make which you think would tend to relieve the condition of things here to which you object? What has occurred to your mind as remedies for the evils you have been describing?

Mr. THOMAS. I believe that the best remedy is more wages to the workingman. That is the best remedy that can be given. The question is, now, how to get the most wages. I believe that so long as money can be invested where it pays no taxes, and where it receives equal protection with the money that is invested in property that does pay taxes, the wages of the workingmen will be poor. In 1865 there were in the neighborhood of 22,000 men working in this county (Lackawanna and Luzerne Counties were then one) for daily wages. They were receiving an average of $900 a year, or in the aggregate $19,800,000 a year. Now the wages have been reduced, and without taking into consideration the increase of working population within the last twelve years, but calling it still 22,000 men, they now receive an average of $180 a year (taking those who are at work and those who are idle). This makes the aggregate wages paid in this county between three and four million dollars a year, being a difference of fifteen millions of dollars less than was paid here thirteen years ago.

The CHAIRMAN. And you would like to have that fifteen millions of dollars come in here again?

Mr. THOMAS. Yes, sir.

The CHAIRMAN. How do you propose to get it?

Mr. THOMAS. If this fifteen millions of dollars were coming into this valley now as it was then, the money would pass through many hands and back again into the hands of business men. It would stimulate manufacturing interests in the East. It would increase the traffic upon the railroads, and bring more money into the hands of railroad companies and business men so that these men could be kept employed. It is not over-production that is the difficulty, but it is under-consumption.

The CHAIRMAN. How are you going to increase the consumption? Will putting the price of labor up increase consumption?

Mr. THOMAS. The rise in wages will naturally increase the price of coal.

The CHAIRMAN. But will putting the price of coal up increase the consumption of coal?

Mr. THOMAS. The increase of wages should precede the increase of coal.

The CHAIRMAN. Suppose I were the owner of a coal mine and believed in your doctrine and thereupon doubled the wages to my men. I go on and pay this double wages, and I find that in New York I will not get one cent more for my coal than the other man does who does not pay as much wages as I do. The consequence is that I become a bankrupt.

Mr. THOMAS. This cannot be done by one individual.

The CHAIRMAN. How is it to be done?

Mг. THOMAS. By passing such laws as will prevent men from investing their money in the property that pays no taxes.

The CHAIRMAN. Then you propose to limit the discretion of men as to the investment of their money?

Mr. THOMAS. No, sir; I propose that Congress shall pass such a law as will protect men who invest their money in property that pays taxes.

The CHAIRMAN. Suppose I have got $100,000, and I go to the government and say, "I will take a 4-per-cent. bond exempt from taxation." If the government should say that it could not give me a bond exempt from taxation, but that it would give me a 6-per-cent. bond on which there would be a taxation of 2 per cent., what would be the difference to the taxpayer in that?

Mr. THOMAS. That may come in the future. I am speaking of the past. The CHAIRMAN. Congress has done the very thing you recommend. Instead of the government selling 6 per cent. bonds, Congress has prescribed that the government shall issue 4 per cent. bonds free of taxes. Is not that the same as if the government issued 6 per cent. bonds subject to a taxation of 2 per cent.?

Mr. THOMAS. That piece of legislation has been already accomplished, but the evil has been in the past. I noticed this morning, when Mr. Smith was here, that he was speaking of the reduction of the currency. You claim that the currency has not been contracted from 1865 to the present time. Well, admit that, for the sake of argument, but why is it that wages at that time averaged $900 a year, and that at present, with the same amount of currency in circulation (as you claim), wages are $180 a year?

The CHAIRMAN. If you want me to answer the question whether wages are determined by the amount of currency in circulation, I answer no. Wages are not determined by the amount of currency. Wages are determined by the condition of business, by the demand for labor, and the supply of labor.

Mr. THOMAS. The consuming power of the people is what makes the demand for labor.

The CHAIRMAN. Certainly. If you increase consumption you will increase the demand for labor; but please give us the receipt for increasing the power of consumption.

Mr. THOMAS. You cannot increase the consuming power of the people without increasing their purchasing power.

The CHAIRMAN. But how is it to be done?

Mr. THOMAS. Here is one thing which we object to-prison contract labor. That is one of the great evils that we are laboring under.

Mr. RICE. How much of the iron or coal business is done by prison contract labor? Mr. THOMAS. There is no iron or coal business done by prison contract labor, but there are some articles manufactured by prison contract labor.

Mr. RICE. What are they?

Mr. THOMAS. Hobbles for horses are manufactured by prison contract labor. They are manufactured in Maine and sent through the country. In this State they manufacture oil barrels, carpets, brooms, and various other articles. You may find in this city men who are barrel makers by trade working in the mines. Mr. Thompson, who lives near Pittsburgh, must know that there are nearly 300 barrel makers in Pittsburgh who used to make from $2.50 to $3 a day, who have been thrown out of ememployment because barrels are now made under the prison contract system. The CHAIRMAN. What would you do with the prisoners?

Mr. THOMAS. If I were making $2.50 a day at my trade, I would be willing to pay half a dollar a day out of my pocket for the support of the prisoners, in preference to having them interfere with my labor.

The CHAIRMAN. What would you do with the prisoners?

Mr. THOMAS. I would educate them. If you work a man in prison, and tell him that he is to do a certain amount of work, he cannot improve his mind, and when he comes out of the prison he is a worse criminal than when he went into it.

The CHAIRMAN. Would you make prisons like first-class schools, in which prisoners should be educated, so that when they come out they may be professional men?

Mr. THOMAS. If a prisoner works let him work for the State, and let the product of his labor be sold by the State to whoever wishes to buy it, and let the surplus go to support his family.

The CHAIRMAN. In that case the State would set up a workshop to compete with private individuals. Is not that the very thing you are objecting to?

Mr. THOMAS. It is only the very thing that we are having now.

The CHAIRMAN. But you object to it?

Mr. THOMAS. No, sir; we object to a man going to the prison commissioners and saying, "We will give the State of Pennsylvania 20 cents a day for the labor of its prisoners," and then employing these prisoners in making oil-barrels in competition with men who were earning $2.50 a day at that business. It will be far better to give the prisoners wages and let them support themselves.

The CHAIRMAN. But who will pay them the wages?
Mr. THOMAS. Their earnings would pay their wages.

The CHAIRMAN. Then their product would have to be sold in competition with the product of other men.

Mr. THOMAS. Yes, but that would be an honest competition.

The CHAIRMAN. The State must always sell the product of such prisoners. Now, could an individual compete with the State in the manufacture of articles on which prisoners were employed? Would not the State always get the market?

Mг. THOMAS. I admit that; but suppose I come to you as a prison contractor and make an offer for the labor of prisoners at 20 cents a day, and suppose I take fifty men and put them at work making oil-barrels, do I not drive out of that trade a like number of men who were previously getting $2.50 a day for their labor?

The CHAIRMAN. But suppose the State itself made the oil-barrels, as you say it ought to, would it not sell its oil-barrels ?

Mr. THOMAS. Yes.

The CHAIRMAN. And would not the cooper who is engaged making oil-barrels be deprived of work just the same?

Mr. THOMAS. I admit that; but their property would not be sold for taxes to support these prisoners.

Mr. THOMPSON. Do you know any place in Pennsylvania where prison labor is hired

out?

Mr. THOMAS. In the Easton prison the prisoners are making harness.

Mr. THOMPSON. You want it made by the State itself?

Mr. THOMAS. Yes, but not by contract.

Mr. THOMPSON. This broom-making that you speak of, is that hired out?

Mr. THOMAS. Yes; but the State only gets a certain amount.

Mr. THOMPSON. I beg your pardon, the State does not hire out the labor of a single prisoner. The county (not the State) furnishes the materials. The prisoners do the work and the prison authorities sell the product of their labor. They do not hire a man out. They do just what you say ought to be done.

Mr. THOMAS. Then, how does it happen that prisoners are making these oil barrels under a prison-contract system?

Mr. THOMPSON. It is not a contract system; it is a task system. The overseers of the institution furnish the materials, set the men to work, and sell the product of their manufacture; but they do not hire out the prisoners; they never have done so and never can do so.

Mr. THOMAS. Then, how do they make a report that the amount received from this labor does not meet the expenses?

Mr. THOMPSON. That may be.

Mr. THOMAS. Why does not the State sell these articles at the regular market-price? Mr. THOMPSON. It does, whenever it can get the price.

Mr. THOMAS. Carpet-weaving is done in the county jail at Wilkesbarre, and the men regularly in the trade are undersold.

The CHAIRMAN. That shows that the State will always take the market, and that, under the system which you propose, it will always sell its carpets and its barrels. Mr. THOMPSON. Does this institution at Wilkesbarre hire out its labor? Mr. THOMAS. No; it does the work itself.

Mr. THOMPSON. Then it does just what you want done.

Mr. THOMAS. No, sir; not exactly. If the State manufactures any article, let that article be sold at its market value, and let the State compete with other manufacturers at the market value of the article. For instance, I knew a carpet weaver in Scranton a few years ago, and when the institution at Wilkesbarre began to weave carpets, those carpets could be bought for 30 cents a yard cheaper than the carpets made by this man himself. We do not object to their making carpets in the prison, but we do object to their underselling the men who are regularly in the trade.

The CHAIRMAN. Does not the institution get all that it can get for its carpets?
Mr. THOMAS. I do not believe it does.

The CHAIRMAN. Then it is badly managed.

Mr. THOMPSON. That is a county institution, is it not?

Mr. THOMAS. Yes.

Mr. THOMPSON. Well, do not your county authorities get all they can for the prod uct of the labor of their prisoners?

Mr. THOMAS. I admit that they get all that they can; but, at the same time, they do not get enough to pay the expenses of the institution. The injustice of the matter is what we are looking at.

The CHAIRMAN. Do you know what proportion of the people of Pennsylvania are in State prison?

Mr. THOMAS. I do not know.

Mr. CHAIRMAN. Do you know how many prisoners there are in the prisons of Pennsylvania?

Mr. THOMAS. No, sir; I never took any notice.

The CHAIRMAN. If you will take the trouble to look, you will find that it will be the smallest fraction of one per cent., and now I ask you how that can disorganize the whole labor of the State?

Mr. THOMAS. It will disorganize the same percentage of that labor out of its regular paths of business.

The CHAIRMAN. Suppose that these prisoners were not in prison but were outside; would they not be at work?

Mr. THOMAS. Yes.

The CHAIRMAN. They would be either stealing or producing something, would they? Mr. THOMAS. Yes.

The CHAIRMAN. If they were stealing, they would do more damage than if they were kept working in the prison?

Mr. THOMAS. No, sir.

The CHAIRMAN. You think it would be better to have tham outside stealing than to have them inside working, even if their products were given away?

Mr. THOMAS. No, sir; but let these people work, and let their work compete honestly and fairly in the market with free labor. Their work has thrown many out of employment.

The CHAIRMAN. If these men were working outside, would they not throw others out of employment all the same? Suppose they were producing those same yards of carpet and those same oil barrels outside, would not their work displace the labor of so many other men?

Mr. THOMAS. Of course it might possibly displace a few, but then it would be an honest competition.

The CHAIRMAN. But the prices of things are determined by the demand and supply of commodities. That being so, whether these men work outside of the prison or inside can make no difference, except that they probably produce much less inside of the prison than they would outside, and to that extent their work inside is favorable to higher prices outside.

Mr. THOMAS. I do not think so. If their work can be got at 20 cents a day, and if men outside ought to get $2.50 a day, then it is not a fair competition.

The CHAIRMAN. The question of what a man ought to get is different from the question of what a man can get. But you have not yet shown us that any law will accomplish what you desire. That is the difficulty. If these men are kept idle, they have got to be fed at the expense of the community, and the wages of industry have got to be appropriated to that purpose. Therefore all men agree that it is better to have prisoners at work, because, to the extent that they earn anything, it is so much let-up on taxation.

Mr. THOMAS. Here is a man sent to jail. The State gets 20 cents a day for his labor. His wife and family are at home and are supported by their neighbors. Now, if the State would give that man work and say that the expenses of keeping him are so aud so, and that all which he earns beyond that amount must go to his family, that would relieve the neighbors who have to support that family.

Mr. THOMPSON, Would that not be a strong inducement to send men to jail who ought not to go there?

Mr. THOMAS. No, sir.

Mr. RICE. But that would not make any difference at all in the effect which prison labor has upon outside labor. The point is, what is the effect upon labor and business generally of having this prison labor which you speak of thrown upon the market? Mr. THOMAS. I saw in a paper, about fifteen months ago, a statement as to a village in the State of Tennessee (Coalbrook), where there was a mine producing soft coal. A man who was living in the central part of Tennessee invested his funds in that coal mine. After he had been there a short time he became one of the directors of the company, and eventually became the superintendent. There was a strike of the miners, and this man went to the authorities and got the authorities to put prisoners at work in the mines; and where did the miners go?

Mr. RICE. That is sometimes done in some of the Southern States; but it is not done in the Northern States.

Mr. THOMAS. There were hundreds of men and their families living there, and they had to leave the place and to compete elsewhere with other labor. Now, these men would sooner have paid half a dollar a day for the support of the prisoners and have had free labor in the mines.

Mr. THOMPSON. Whether has the carpet business or the coal business suffered most within the last five years?

Mr. THOMAS. The coal business.

Mr. THOMPSON. And yet you have had no competition from prison labor in the coal business?

Mr. THOMAS. No. But if the prison contract system only affects 20 men in other employments, these men come in competition with other laborers elsewhere.

Mr. THOMPSON. But you admit that the coal business, into which prison-labor does not enter, has been worse affected than the carpet business, into which you say prisonlabor does enter. Therefore, that cannot be a reason.

Mr. THOMAS. That is not the reason that the coal interests are dead.

Mr. THOMPSON. Does not the same thing that affects the coal interests affect all other interests ?

Mr. THOMAS. Yes, in a measure; and there are some things again that do not affect it. There are some interests which prison-labor does not affect as injuriously as it does others.

The CHAIRMAN. The State is a bad competitor with private interests; and that is one reason why you complain; and yet you want the State to go in and increase this competition. What you say you suffer from now is the State competition in articles produced by prison labor, and yet you would merely alter the form of that competition?

Mr. THOMAS. We do not care if the contractor uses prison labor provided he pays the same wages as he would pay outside.

The CHAIRMAN. But he will not do so because prison labor is not worth so much as free labor. If prison labor were worth as much as free labor, then the State ought to take the whole of us, put us in stripes, and let the State sell the product of our labor. Mr. THOMAS. I do not believe in that.

The CHAIRMAN. But that would be the logical result if prison labor could be made as effective as free labor.

Mr. THOMAS. Let prisoners be educated as they should be, and taught differently from the way they are taught now.

The CHAIRMAN. You are coming to the details of prison management, and we have not time for that. Your suggestion is that some regulation in regard to prison labor might relieve industry. So far as this committee is concerned, we have no power over county or State prisons, or over workhouses.

Mr. THOMPSON. You will probably find that some prisoners are pretty well educated already.

Mr. THOMAS. I admit that; and these are the men who have money to hire nice rooms and to have newspapers and books in their prison cells.

Mr. THOMPSON. There are two penitentiaries in Pennsylvania. Is there any distinction there between poor men and rich men?

Mr. THOMAS. I do not know that there is much distinction.

Mr. THOMPSON. Do you not know that there is absolutely no distinction?

Mr. THOMAS. But there has been in other States. Take for instance Mr. Tweed. Mr. THOMPSON. But he was not in a Pennsylvania prison. Let the chairman answer for him. I want it put down that in the State prisons of Pennsylvania there is absolutely no distinction between rich and poor, bond and free, white and black. There can be none and there has been none.

Mr. THOMAS. There are contractors for State-prison labor in New York, and this labor throws 1,400 men out of employment in Albany and other towns.

The CHAIRMAN. There are not 1,400 men, women, and children in the State prison, and how can prison labor throw 1,400 men out of employment?

Mr. THOMAS. There were 900 pr`soners and about 500 free men who were tramps, but who were willing to work.

The CHAIRMAN. Do you object to allowing tramps to work?

Mr. THOMAS. Not the least.

The CHAIRMAN. I thought that the grievance against tramps was that they would not work.

Mr. THOMAS. That is not the trouble. I would keep the prisoners shut up and let the honest men work.

The CHAIRMAN. Do you think that it would be better that tramps should not work? Mr. THOMAS. No, sir.

The CHAIRMAN. Suppose that somebody set all these tramps to work at 50 cents a day, would that be good or bad for the community?

Mr. THOMAS. It would be good.