to the end of time? Would a commercial nation be justified in looking ahead and making provision for such cases?

Mr. ATKINSON. I should say that, if there was no question of revenue coming in, no nation would attempt to impose a tariff for the purpose of protecting itself against that accidental or abnormal condition of things. But it does not seem to me a live question at this moment. We all admit that, whether beneficially or otherwise, we have changed the direction of our industries through the policy that has obtained; and no man of common sense proposes to sweep away the existing tariff at one sweep. I would cease the discussion between the two opposite theories (and I have tried to do so for the last two years), and I would have the two sides come together as they can come together, and, from their respective standpoints, agree upon a practical measure which both can sustain.

The CHAIRMAN. But the question will not down. You cannot get rid of it. The difficulty is just this: The duty which protects the manufacture of steel rails in this country is not a revenue duty, and the moment you make a revenue duty of it it ceases to protect, and it opens the market to the foreign producer. That is the fact, and you cannot wipe that fact out.

Adjourned till to-morrow morning.

Mr. Atkinson, at the next session, added: "I would answer your question as Daniel Webster did in 1820, that the imposition of a tax on foreign goods for the purpose of keeping out a temporary glut that might somewhere exist, would be like a strong and healthy man daily taking physic lest, at some future time, he might be sick."

VIEWS OF MR. EDWARD ATKINSON—Continued.

WASHINGTON, D. C., December 13, 1878.

The CHAIRMAN. Passing from the question of tariff and free trade (which we may consider to have been exhausted yesterday), I should like you to turn your attention to the labor question, with reference to wages in all parts of the globe. I desire to ask you whether you detect any agencies that are equalizing the rates of labor in different countries, and whether you are able to state any consideration that would go to show that wages can be, artificially or otherwise, kept higher in one leading commercial country than another. I put the question in a very general form, in order that you may answer it in your own way and from your own direction.

Mr. ATKINSON. Ishall answer it in a little different direction from that indicated by the scope of the question. I think that the application of railroads, of telegraphs, and of machinery, combined, is tending to equalize prices the world over, for leading commodities and staples. It is leading to conditions in which the rate of wages is of less relative importance than it formerly was, and to conditions in which that country which has the advantage of position, of fertility, of natural resources, of absence of standing armies, and absence of other obnoxious burdens of that sort, can pay the highest rate of wages to the persons operating machinery, and yet send its goods to the markets of the world at the lowest cost. The cotton-mill operative of forty years ago could produce three yards a day of the goods that are exportable. The cottonmill operative of to-day, at higher wages to himself or herself, produces ten yards a day of the same fabric. Hence the proportion of cost, which is represented by mill wages, is far less than it was forty years ago; and proximity to the cotton fields and to supplies of food, proximity to the market where the goods are sold, and the establishment of easy communications between the vendor and the vendee, become the paramount conditions of success.

The CHAIRMAN. In other words, the percentage of cost in working up the raw material has been greatly reduced, while the cost of the production of the raw material has not had a corresponding reduction?

Mr. ATKINSON. It has not.

The CHAIRMAN. The cost of the raw material has remained comparatively steady, while the cost of utilizing the raw material has steadily decreased ?

Mr. ATKINSON. Aside from war prices, yes. The most striking illustration of that would be to go back a century, prior to the application of self-acting machinery to textile fabrics. I do not know the exact capacity of the spinning-wheel, but, as far as I can ascertain the relative conditions of then and now, the work of one person in five or six in a community was absolutely requisite to furnish the fabric for the clothing of the family. To-day one person in two hundred or two hundred and fifty produces the fabric required for the community.

The CHAIRMAN. There seems to be an impression among a great many persons (and it has been stated to the committee) that the condition, physical and moral, of the

past generations to which you have reference, was better than the condition of the present generation; that, although they had to devote so much more labor to clothe and feed the community, nevertheless their physical and moral condition was better than that of the present generation; that there was less suffering in the community then than there is now. Has your attention been directed at all to the physical and moral condition of the people of the past century as compared with the people of this generation?

Mr. ATKINSON. Yes. It requires broad generalization to answer that question. The answer is this: The character of the population of a century ago was very different from that of the population of to-day in capacity to live rightly and properly. The pauper immigrant had not arrived; the ignorant person had not arrived to any extent; and the work that was done at that time, the drudgery that was done at that time, was done by the whole community. Those who now do the drudgery could not have had any existence in those days; they would have starved; there would not have been any room for them.

The CHAIRMAN. In other words, the class of population represented by the people of the last century has been very much elevated in social position, and has given possibility of existence to another class.

Mr. ATKINSON. Unquestionably. They have risen into a far higher and better condition of life, and have made room for a class which could not have had any existence, which did not have intelligence enough to live.

The CHAIRMAN. The grievance and complaint is that this class which does now live is suffering to such an extent that it would be better that it never had existed. That seems the real point of the grievance that there is a class which formerly did not exist at all which to-day does exist, and among which there is very great suffering, and a constant liability to destitution. Is there anything on the other side to make the existence of such a class excusable or desirable?

Mr. ATKINSON. If it depended on human intervention, and if it was within the limits or possibility of legislation to provide otherwise than the present provision for that class, there would be no excuse for its existence. I should like to illustrate further in reference to the change that has taken place. The population of a century ago was very superior to the population that is now engaged in drudgery. It has been lifted up. That change has taken effect especially in textile factories within the last 25 years. When textile factories were first established in this country there was no occupation open to farmers' daughters except the drudgery of home life—the exceedingly hard work of New England farm life. They went into factories, and from the factories passed on up into a very far higher range of employment. At the time that they were in the factories, the imperfections of the machinery of that day required the superior intelligence of the class of persons who then filled the mills. But they have gone into far higher grades of employment. The machinery has become more and more selfoperative, requiring attendants to meet faults rather than to compass ends; and a class has come into the factories which would then have been engaged (if it could have lived at all) in a far lower range of employment than that of factories. They are now well employed at higher wages; wages, every dollar of which has a higher purchasing power than it had thirty years ago. My theory of the advance in wealth and condition and progress of invention is that the apex is always rising, lifting with it the first base, making room for a broader base underneath which could not have had an existence; that this goes on in the progress of events, and that it will culminate ultimately in such absolute control over the forces of nature, and in such absolute assurance of abundant production of everything which we need for material prosperity that the lowest intelligence, coupled with industry and tolerable integrity, will be sure of a decent

subsistence.

The CHAIRMAN. You would say that, in the progress of industry, a larger number of persons are able to have the comforts of life than could have them before in the preexisting condition, when machinery and industry were not so developed ?

Mr. ATKINSON. Most undoubtedly.

Mr. RICE. You do not mean to say that the lowest class of society now is as low as the lowest class of society was 100 years ago in other countries?

Mr. ATKINSON. Not in other countries. I am speaking distinctly of this country. Mr. RICE. In other countries the lower classes are perhaps something above the lower class that have crowded in here and have taken the lowest plane.

Mr. ATKINSON. Taken the lowest plane-a plane for the existence of which there was no possible place before.

The CHAIRMAN. If machinery, which has been introduced during the last century. were abolished, suddenly or gradually taken out of existence, as I understand you, the result would be that population would necessarily be reduced, and that when it got down to the point where it could live from the productions of the soil by rude labor. then the number of persons surviving would be very much less than the number that is now able to have a comfortable livelihood.

Mr. ATKINSON. Unquestionably. This country has passed through two periods, and

is now passing through the third-a very strange one, such as never happened before in the history of the world. The first period was a period of possible scarcity for large masses of population, when the possibility of producing enough for the barest subsistence was the question at issue. It was an absolute struggle for life, for the means of living, on the part of great masses of the people. Invention and discovery have abated that, and we passed into the period where there was the possibility of excess in one section of the country and of scarcity in another, when the question at issue was the question of the mechanism of distribution-the railroad, the canal, the highway. We have passed out of that into a period to-day when, with the existing machinery and the existing population, the idea of possible scarcity anywhere, at any time, of any essential thing, can hardly be conceived in this country; and you have come to the point where the questions at issue are the method of distribution, and how to stimulate consumption; how to make use of the vast excess of quick capital which burdens all markets throughout the country in every line of production-how to stimulate consumption here or elsewhere.

The CHAIRMAN. That is, how to diffuse the area of consumption so that people, who are now uncomfortable for want of things, may be able to get them?

Mr. ATKINSON. Yes; you have on the one side the mass of unconsumed commodities. loading the warehouses, and a cause of depression and loss to the producer. You have on the other side, to a very much more limited degree than the popular mind conceives, a considerable number of unemployed laborers eager and willing to do the work which would entitle them to consume this excess, or a portion of it. And how to establish such conditions of mind (for it comes really to a mental condition), that constructive enterprise (having reference to the need of a future population) shall begin again in a large way, seems to me the problem of the hour.

The CHAIRMAN. In other words, there are plenty of things in this country that ought to be done, and plenty of capital to do them with?

Mr. ATKINSON. Yes.

The CHAIRMAN. But there is an indisposition to use capital for that purpose?

Mr. ATKINSON. Yes; but there being something wanting, the machinery has stopped for the present.

The CHAIRMAN. The machinery has stopped?

Mr. ATKINSON. That is my view.

The CHAIRMAN. Can you suggest anything that governments can do to set this machinery in motion?

Mr. ATKINSON. The one thing that you can do, and that you are about to do, in my hope and judgment, is to establish a single unit of value which shall be the single legal tender, and which will give confidence to the man who invests his capital to-day that he can get back its equivalent next year, or in the next generation, if he wisely makes his investment.

The CHAIRMAN. You are aware that the State now does provide a single unit of value?

Mr. ATKINSON. Yes.

The CHAIRMAN. Therefore there is nothing left for us to do in that particular except we undo it, and that, I hope, we will not do. What is your idea about establishing a single unit of value? Is it that all other forms of money shall be convertible into it? Mr. ATKINSON. That all other forms of money shall be convertible into that single unit of value so as to give them the utmost stability that any concrete form of human labor can have.

The CHAIRMAN. And you think that until that is assured, the persons who control capital will be very unwilling to put it out of their hands?

Mr. ATKINSON. I do.

The CHAIRMAN. And you think that that (which may be really termed an intellectual cause) is really at the foundation of the solution of this question?

Mr. ATKINSON. I do, most emphatically. I do not say that now for the first time. You know very well that all this course of disaster, of stagnation, and of loss was predicted in 1867, 68, and '69 as an absolute necessity. I remember myself writing in 1869 the sentence, that if the restoration of the currency to the specie standard did not come through voluntary legislation it would come through involuntary bankruptcy; that it was in the nature of things, and could not be prevented by any act of Congress or by any act of legislation. It was only a question of the magnitude of the hardship to be gone through, and its spread over a less or greater surface that could be affected by Congress. I am of the opinion, and have been, that the whole era of disastrous speculative enterprise in railroads and municipal extravagance could have been avoided by the application of the surplus gold revenue of the country from the year 1866 to the year 1870. (I am not absolutely sure of my dates, but substantially.) There was a period of ten years, ensuing immediately after the war, in which the actual surplus revenue of the country, received in gold coin and subject to the will of Congress and of the Secretary of the Treasury for its application, exceeded five hundred million dollars. Had it been expended for the demand notes due and dishonored, instead of for

the purchase of long bonds that were not due, at a high rate of premium above the par of those notes, the reduction of the debt would have been many million dollars greater than it has been; and the one cause, the one greatest cause of all the disaster that has occurred in the last five years, would have been removed, the inconvertible note.

The CHAIRMAN, You stated that the owners of capital were unwilling to invest their money in enterprises because they were not certain of what they would get back for it, because they had not confidence. That statement is not quite clear, unless you go farther and explain whether the owners of capital, as a rule, invest their money directly on their own account in enterprises (in which case they would have the property on which they expended their money), or whether they generally proceed by lending their money to others who are borrowers, and who go on with enterprises. Are constructive enterprises carried on mainly by borrowers or by people who own the money that is put in? You see that, in the one case, the capitalist would have property for his money, and in the other case he would have evidences of debt to be repaid to him; and it seems to me that it makes a vital difference in the matter as to which way construction usually proceeds. For instance, if I want to build iron-works, I put in my own money and get my iron-works, and expect to run them and sell the product for whatever may be the money in circulation, whether paper money or in gold coin. That is one way of using capital. Another way is, if a railroad is to be built, money is borrowed on bonds to build it; and the man who lends the money and takes the bonds wants to know whether he will get back money as good as he gave. cious for men to borrow on the plant. The larger manufacturing enterprises should Mr. ATKINSON. In regard to manufacturing enterprises, it is not deemed very judiown their plant. That is almost essential. They may, and do, to a very large extent, borrow their working capital. The funds of the savings banks of Massachusetts constitute a large portion of the working capital of the factories and works of Massachusetts.

The CHAIRMAN. But these kinds of short loans, repayable in a few months, are not subject to the difficulty which you stated at the outset, that a man wants to know what he is going to get back for his money, because the fluctuations in the value of money are too small in a few months to affect the matter.

Mr. ATKINSON. These loans have been long loans; but there has been an act passed by the legislature recently that no savings bank shall make a loan for longer than one year. They were formerly made for three years, and even now they are very apt to stand by renewal from time to time.

The CHAIRMAN. On what security are they made?

Mr. ATKINSON. On the note of the corporation, with individual directors as personal security. There is an enormous sum of that sort of capital used in manufacturing establishments for working capital.

The CHAIRMAN. And the system of New England manufactures has been largely developed and carried on in that way?

Mr. ATKINSON. It has been.

The CHAIRMAN. It is very interesting to have that statement made, because I think that that is not the case with any other manufacturing community in the world. I know that it is not in New York or in New Jersey, and I think that it is not in Pennsylvania. There savings banks are absolutely prohibited from making such loans.

Mr. ATKINSON. There have been in Massachusetts scarcely any losses from that class of securities. I cannot state the amount (Mr. Rice is as conversant with it as I am) of the money of operatives and working people thus invested in manufactures at a fixed rate of compensation (not being at the risk of the business). The amount may be counted by millions.

The CHAIRMAN. In other words, you have, in New England, actually converted your laborers into capitalists. They have been the capitalists by whose money factories have been carried on.

Mr. ATKINSON. To a very large extent.

Mr. RICE. Savings banks in Massachusetts furnish capital for a great many other enterprises as well?

Mr. ATKINSON. Yes.

Mr. RICE. I recollect looking over the list of stockholders in the Worcester banks during this last season, and, out of 21,000 shares of stock in the Worcester banks, I found that 8,500 were owned by savings banks and insurance companies; the greater part by the savings banks, more than one-third. Then their funds are largely invested in buildings. Our city blocks are resting very largely on mortgages to the savings banks.

The CHAIRMAN. That is true in other States. The savings banks lend money on real estate.

Mr. RICE. And then again, when the money of the savings banks goes into manufacturing enterprises, the capitalists, the men of wealth, who are engaged in those enterprises, sign notes to the savings banks, either as principals or as sureties. These

personal notes to which you have referred must have three names.

And in that way

they borrow from the savings banks the working capital of the establishment.

Mr. ATKINSON. In regard to a very large proportion of the textile factories of New England, operatives who have had an interest in the capital through the intervention of savings banks have received a larger protit than the owners of them have received for the last seven years.

The CHAIRMAN. In other words, the profits of the business have not been sufficiently large to pay to the owners as high a rate of interest as the borrowed money has received.

Mr. ATKINSON. That is so.

Mr. RICE. State, with reference to the savings banks, where the losses have been principally in Massachusetts. Have they been from those personal notes, or have they been from loans made on real estate-from mortgages on real estate that was overvalued?

Mr. ATKINSON. Very much more from mortgages on real estate. I scarcely know of a loss on this class of personal notes. The treasurer of the largest savings bank in Massachusetts, the Provident Institution (the oldest but one in the United States), told me within three or four years past that that institution had never made a loss upon that class of security, and I do not think that it has made a loss upon it within the last three or four years.

Mr. RICE. I do not think that the savings banks in Worcester have lost a dollar in that class of securities. They have lost somewhat, of course, by the depression of stock in which they invested at appreciated prices, and they have lost slightly by over-valuation of real estate on which they took mortgages. But the principal losses to our savings banks have been from the depreciation of bank and railroad stock which they were forced to take for the purpose of investing their funds.

The CHAIRMAN (to Mr. Atkinson). I do not see that the proposition which you laid down originally, as to want of confidence, would apply to this class of investments at all. In the first place the loans are loans of aggregated capital by the trustees. It is, therefore, the desire and disposition of everybody to keep that capital going, and the factories would be carried on by the means which you described, without reference to the ultimate mode of payment.

Mr. RICE. The savings banks do not now lend their money in that way. They are troubled to find places to lend their money, from want of confidence in such enterprises.

The CHAIRMAN. I understood Mr. Atkinson to say that the oldest bank there had never lost a dollar by loans of that kind.

Mr. ATKINSON. But they are afraid that they will.

The CHAIRMAN. Are they afraid of the failure of the enterprises to respond, or are they afraid of some change in the currency? All that the trustees have to do is to be sure to get back the kind of money that they loaned.

Mr. ATKINSON. Yes; but they look at the possibility of the undertaking being swamped through the fluctuations of the currency.

The CHAIRMAN. That is alleged to have been the great grievance in this country, the great source of all our troubles, that a shrinkage has taken place, and that it was an unnecessary and cruel process to people engaged in business; that it could have been avoided if proper legislation had been had, and particularly if the resumption act had not been passed. It is alleged that we could have gone on on the inflated basis on which we were, and could have avoided all these enormous losses. If you have got any opinion to express on that subject, I wish you would give us the benefit of it. Do you think that the losses could have been avoided?

Mr. ATKINSON. It was not possible to have avoided them.

The CHAIRMAN. Suppose that Congress had not legislated on the subject at all, would the same process of shrinkage have gone on?

Mr. ATKINSON. Unquestionably. It would have come from bankruptcy or repudiation. That is my deliberate judgment. You cannot carry on a business or enterprise of any kind and subsist the people on a fluctuating standard of value.

Mr. THOMPSON. I understand you to say that what conduces to this prostration and want of activity in business is fear of capitalists, or of those who control capital; that if they invest their money to-day, they will not get it back to-morrow in the coin or in the value of to-day?

Mr. ATKINSON. That they will not get it back in the equivalent of what they lend. Mr. THOMPSON. That may have been true a few years ago; but how can it be true to-day, when any change from to-day's standard must be in the increase of value? Mr. ATKINSON. So long as it lies within the power of Congress to alter the conditions of the standard of value, so long will there be distrust and want of enterprise in the community. You cannot repeat inflation. You have passed through the crisis once; you have come to the collapse, and there you must stay until you get to a unit of value-a unit that gets its value from the labor that is in it, and which it represents, and not from an act of Congress.