Miscellaneous Documents

of industry lead directly to crises and the general derangement of the social and industrial systems. To be consistent, Congress should either protect every industry equally or leave them all alike free, to be regulated by the natural laws.

41. But it may be argued that "free-trade" England has its panics and its crises, as well as "protected" America. Quite true she has, and for the same reasons. America, her natural customer, whose breadstuffs and cotton she requires, refuses to exchange with her a large part of the products of her labor and capital. England has also, as I have shown, an artificially and badly regulated monetary and financial system, of which the Bank of England is the center or focus, a bank that persists in treating its own share of the note issue, founded on securities instead of cash, as good cash reserve, and has a traditional board of managers, who, because they can take these notes to the issue department and buy gold with them, fail to perceive the difference be tween cash and credit. This is the natural consequence of banks investing all their paid-up capital in national securities, and relying on borrowed capital for a trading margin. I wish your committee to make a note of this important fact, for it cuts the ground from under two thousand national banks, as well as of the Bank of England. If the plan is good in banking, why not extend it to all industries-the manufacturers of engines, cars, and rails, for instance?

42. I have omitted to meet a plausible, but most unfounded pretext, set up by some bank doctrinaires, in favor of banks of issue, until now. It is that a paper currency, issued by the state, "is not a proper commercial currency," because, forsooth, "it does not grow out of industry and production." See Mr. Spaulding's Centennial Address, page 57. The Times, of this city, lately asserted, that, as paper money naturally grows out of commercial transactions, only banks can keep the supply exactly equal to the demand. The utter absurdity of such assertion-reasoning it cannot be called— appears from the self-evident proposition that paper money, convertible into metal, which is the only sound paper currency, rests on the metal, and, as those who use it in commercial or other business, pay the same price for it as they pay for metallic money, it follows as a logical demonstration that a State issue is just as much a commercial currency as metal itself. Banks are not the deputies, by divine right, to regulate supply and demand. The wants of the people, who prefer good paper money to coin, and especially to the short-weighted silver dollar, determine the supply of the more convenient tool, and not banks at all. The quantity and amount of trading power, resulting from bills, are more within the control of banks than money which they receive on deposit and keep on hand to accommodate customers. Bills of exchange certainly do grow out of industry and production," but money, metallic or paper, never. 43. I earnestly hope your committee will see the impropriety of Congress attempting to regulate the hours or the wages or price of the products of labor, all of which belong to the same category. Finally, as far as the present depression in business is concerned, Congress should not, in my judgment, attempt to interfere with the action of the natural laws, which are rapidly setting the industrial machinery in motion again. What Congress can properly and usefully do is to set to work, as I have before suggested, and free all industries as fast as a due regard for vested legal abuses will permit, without a too violent shock to society; and first, and most important of all, abolish all banks of issue. A long and careful analysis of the operations of such banks, commencing with the establishment of the Bank of England in 1694, has led me to the irresistible conclusion that nearly all the evils arising from banks in modern times, and they have been enormous, have resulted from banks of issue; and that nearly all the advantages, and they have been immense, have been due to banks of deposit and discount. I therefore say abolish banks of issue, as such, in toto, and amend the national banking laws so as to compel all joint-stock banks to organize under them and report to a department the condition of their affairs. When something of this kind is done, and the National Government ceases to override the natural laws of society, one great step will have been taken towards averting those destructive industrial cyclones, which are the efforts of natural causes to cure artificiallyproduced evils.

44. I had intended to have closed with the last paragraph, but, since it was written, I notice great stress is laid by many "stump" orators and some more thoughtful reasoners on the effect of the destruction of property produced by a million of men during the four years of the civil war." It is strenuously argued by many that the panic of September, 1873, eight years and a half after the war, and following seven or eight years of great prosperity, was largely due to such destruction of property. The same class also lay great, if not equal stress on the inflation of the paper currency. Now, a moment's reflection will show the absurdity of the position taken by such reasoners. They argue, quite correctly, that bank and currency inflation led to over-production and a general fall in the prices of labor and goods. These gentlemen are called on to explain how the scarcity of labor and goods during the war, caused by the destructive occupations of a million of men, could have influence in bringing about a crisis at a time when the markets were glutted with labor and production, stimulated by inflation. The two propositions seem to me to be wholly irreconcilable, even on the theory of the Satyr, who blew hot and cold at the same time.

45. I will explain it for them. The destruction of goods and waste of labor are represented by the national debt, and, to a large extent, have yet to be paid for or made good to society. We simply borrowed the capital which has enabled us to bridge over the chasm of wasted labor and destruction of goods and other property, and the interest falls lightly on the national industries. As a matter of fact, proved by the census of 1870, the withdrawal of a million of men for four years from productive industry and their employment in destruction of property was set off by the stimulus of high prices (caused by the inflation of capital and values) on the productive energies of those who remained. About 95 per cent. of all the products of labor are destined to destruction by consumption within the year in which they are produced and taken to market. Besides, those who lay so much stress on the destruction of the war are called on to prove that the surplus profit of labor and capital was less during than prior to and since the war. This will be a hard thing for any statistician to do.

NOVEMBER 16, 1878.

Since the foregoing communication was written the results of the elections in twentynine States enable us to perceive most clearly that the country will not tolerate an inconvertible, inflated, and fluctuating legal-tender paper currency. No leading man possessed of common sense, will any longer follow the ignis fatuus of “fiat money." That question may be taken as settled, and as being no longer a disturbing element in national politics. The only one in respect to currency, is the substitution of national for bank notes and the constitution of a "Money Department of State," wholly independent of the Treasury and unconnected with banks. Until this is done the currency question will continue to be a leading subject of agitation and contention. If it should die out for a time, the next crisis-which is as certain to come in a few years as the rising and setting of the sun, and which will be produced, like all past crises, by bank issues of paper and inflation in bank capital and discounts-will cause a renewal of the agitation and another long period of financial embarrassment. Now is the time to cut the connection between the nation and the banks and to establish an issue of paper money to be sold dollar for dollar for gold. There may be a few idiots who will cry out against specie payments, but they cannot command "a corporal's guard” of

voters.

I have the honor to be, gentlemen, your very obedient servant, The CONGRESSIONAL LABOR COMMITTEE.

H. BOWLBY WILLSON.

MELROSE HIGHLANDS, MASS., October, 1878. SIR: The subject referred to the committee of which you are chairman, is of very great importance; and while I doubt the power of Congress to do much by legislation to better the condition of the laboring classes, except by giving us a currency convertible into coin at the pleasure of the holder, by a modification and simplification of the revenue laws, and giving some assurance of permanency to the laws in relation to revenue and finance, the continued agitation of these laws and the uncertainty of the result of this agitation, prevent capitalists from investing money in the employment of labor with any prospect of a fair profit or even the capital.

I have expressed the idea that legal enactments can do but little good to relieve the present financial pressure, yet a knowledge of the causes may suggest a remedy, or at least prevent a like disaster in the future. These causes may be enumerated as follows:

1. Undue expansion of the credit system, so that individuals, churches, towns, counties, States, and corporations, are almost hopelessly in debt. This use of credit rendered it very easy to contract debts, and led people generally into extravagant habits of living. And it is very difficult and humiliating to retrench.

2. The too compon desire on the part of those of both sexes just commencing life, to avoid hard manual labor, and to seek those branches of industry usually considered more genteel. Hence we find GENTILITY OVERSTOCKED. If the thousands of unemployed men and women had gone onto our uncultivated lands ten years ago they might now have been independent.

3. A class of the unemployed (I fear quite a large class) are determined not to engage permanently in any occupation that requires real hard work and perhaps hard fare; and these are the men who are most prominent in the labor-reform movement. Now I cannot perceive how Congress can aid either of these classes.

Again, many of these complainers spend a large portion of their earnings for tobacco and intoxicating liquors. It would be within the scope of the inquiry intrusted to your committee to ascertain as far as practicable the amount of wages expended for these articles, and at places of amusement. It would be found that enough is thus wasted to go far in the amelioration of the condition of the laboring classes. A farm laborer from my early childhood to more than seventy years of age. With sentiments of respect, I am, yours truly, G. C. WATERMAN.

Hon. ABRAM S. HEWITT, M. C.

BOSTON, December 16, 1878. DEAR SIR: I have the honor to acknowledge the receipt of your communication of the 11th instant excusing me from giving evidence before your committee and requesting me to communicate, in writing, my views on the subject-matter of the inquiry for which the committee was constituted.

I should be very glad if I could aid the committee in discharging the difficult and arduous duty assigned it; but I fear that I shall be unable to add much to the knowledge it already possesses.

The committee-as appears by the resolution constituting it-is instructed to inquire into and ascertain the causes of general business depression, especially of labor, and to devise and propose measures of relief."

What, then, are the causes of the general business depression? The fact that business is as much depressed in Germany, and even more in Great Britain, than in the United States, is sufficient proof that it is not due to any laws or institutions peculiar to ourselves.

The depression complained of is the natural and inevitable result of overtrading. It is merely the reaction of previous overaction. Many causes doubtless conspired to induce this overaction, but a sufficient and controlling cause is found in the excessive use of credit. The effects of this excessive use of credit have been felt, more or less, in all departments of business. The interests of labor have suffered in common with other interests; but not disproportionately. There is no reason in the nature of the case, nor in the present business depression, why the interests of labor should receive special legislation any more than other interests. I can conceive of no special legislation in regard to labor which would not cause more injustice than it would remove. The interests of labor are so identified with other interests that they cannot be specified with sufficient distinctness to form a basis of special legislation. In view of the fact that all are laborers, that professional and business men are the hardest workers, and that a considerable portion of the mass of laborers are capitalists, that is, are owners of property, where can a dividing line be drawn? The condition of the laborer has constantly improved during the last century. Formerly he toiled long, produced little, and enjoyed less. Now his hours of labor are fewer, his wages greater, and the purchasing power of his earnings larger than at any previous time in the world's history.

As I have stated elsewhere, whatever of hardship or injustice comes to laborers is caused by the general course of human affairs, which affects the rights and interests of men in all the relations of life. Bad laws, bad faith, vicious modes of doing business, undue use of credit, and fluctuations of trade, affect the whole community-the interest of labor in common with other interests. The condition of laborers, as a general fact, can be improved only by reforming the modes of doing business, and by elevating the general condition of society of which they form a part. When the state authorizes a concentration of business by granting acts of incorporation, a condition of affairs more or less artificial is created. In such cases it may, perhaps, be the duty of the state to prescribe to some extent the conditions under which laborers should be employed. If the aim should be to limit the hours of labor, they should not be reduced below ten hours a day, or sixty hours a week. I believe that the moral and physical well-being of laborers would be better promoted by that number of hours of labor than by a lesser number. Whatever limit may be fixed, it should be the same for government employés as for private enterprise, and should be uniform in all the States. The present law limiting the hours of labor in government workshops to eight hours a day is unsound, and should be repealed. It is easier to specify the causes of " the general business depression than it is to devise and propose measures of relief." I think that natural laws are much more likely to bring relief than statute laws. In fact the operation of natural laws has already brought us to the beginning of a career of substantial prosperity. Any special measures of relief, based on the present abnormal condition of affairs, would probably tend to diminish rather than increase that prosperity. It is the height of wisdom to know what not to do.

In the Atlantic Monthly for October, I contributed an article on "the relations of labor and capital," in which I endeavored to set forth the principles which underlie the labor question, and to designate some of the causes of the general business depression. I have no new views to communicate, and take the liberty of sending each member of the committee a copy of that journal.

I have the honor to be, very respectfully, your obedient servant,
E. B. BIGELOW.

BIDDEFORD, ME., January 8, 1879.

DEAR SIR: In complying with your request to respond to the questions contained in your circular, I state that I have been in the management of the Pepperell Manufacturing Company since 1850, when it began the business of making cotton goods. And increasing its machinery from time to time, it now has about 85,000 spindles and 2,200 looms, narrow and wide, employed in making drillings, jeans, and sheetings, turning out a yearly product of about 7,000,000 of pounds and 20,000,000 of yards.

These mills have been run without interruption since 1850, and now employ about 1.600 persons (say 400 males and 1,200 females), at fair wages; and there has never been a turnout or strike or any trouble about wages or the hours of labor. The capital is $1,200,000, and it contributes in taxes yearly from $25,000 to $30,000.

Between 1850 and 1861 a large portion of the goods made, such as drillings and jeans, were exported, chiefly to China, where they acquired a reputation beyond all others. During the war this export ceased, and was not regained until within the last three years, since we have been approaching the coin standard of the world. While the prices of cotton, supplies, and labor were in currency, considerably above their value in gold, exports of our goods were not possible, and the English and Dutch used our trade-marks for fifteen years, and supplied the markets we had before the war, and it is within my knowledge that large fortunes were made in England by the use of the trade-marks of this company. And during the last three years these mills could not have been run three days in the week if we had relied upon the home market for the sale of our fabrics; and this would have been true of a large portion of the cottonmills of New England working upon staple brown goods. Nothing but this outlet for our goods in foreign markets has enabled the cotton-mills of this country to run full time and give employment to those dependent on this great industry; and this has turned entirely upon working upon a specie basis, or nearly to that, and I am certain this has not been sufficiently considered by those who mold public opinion and make our laws; and I may add, it is not too much to say that, working upon a specie basis with judicious legislation, we can displace our rivals in many of the markets of the world, and give to several of our leading industries, such as cotton manufactures, boots and shoes, leather, iron, agricultural implements, furniture, not to mention others, a development and prosperity hitherto unknown in this country.

These, reacting upon our agricultural interests, and stimulating them as never before to larger production and better methods, will send to the people of other lands the wheat, the corn, the butter, cheese, beef and pork in such volume and at such low prices as never has been known, thus ameliorating the condition of the toiling millions the world over, and enriching our own people in every part of the land.

To maintain, therefore, a specie basis is, in my opinion, the supreme duty of the hour, underlying as it does the prosperity of labor in agriculture, manufactures, and commerce. It is better than tariffs, which without it are a sham and a cheat. This, indeed, is the true relief for labor; this is the chief measure to restore labor to its just rights.

I now proceed to answer some of your inquiries in the circular sent to me:

1st. With cotton about 20 per cent. higher in December, 1860, than in December, 1578, the selling prices of our products are more than 40 per cent. lower now than

then.

2d. In the Pepperell mills about 1,600 persons are employed; say 400 males and 1,200 females. In December, 1860, the mill expense, which is exclusively for labor in making our goods, was 2.34 mills per hank; in December, 1865, 4.31 mills; in June, 173, 3.63 mills; in December, 1873, 3.41 mills; in June, 1876, 2.48 mills; in December, 1-78, 2.04 mills; and these figures represent the cost of labor per hank for the six months ending at each of those dates.

But while we make our goods cheaper in 1878 by about 13 per cent. than in 1860, it must not be understood that wages are lower now than then, for they are, in fact, fully 20 per cent. higher, while the purchasing power of a dollar is more than 12 per cent. greater now than then. We make our goods cheaper by reason of improvements in machinery and arrangement of it for economy of work.

The employés have had steady employment in these mills between 1860 and 1879, excepting for a short period in the summer of 1861, when there was a pause before entering upon our unhappy sectional strife.

34. I am not able to reply with precision to the third inquiry, as all the information asked for is in the treasurer's office in Boston; but, for many years past, the dividends have been five per cent, semi-annually; but, to obtain this result, after expending a sum sufficient to keep the mills in good condition, the corporation has had the use of a sum equal to 50 per cent. of its capital, accumulated during the 28 years of its active life.

4th. I am not able to give a reply to this question with satisfaction to myself or so as to give any very reliable information to yon.

5th. The rents of tenements for the operatives are fully 25 per cent. lower in 187879 than in 1866.

1874..

1875.

1876..

1877.

1878, 6 months

Totals

Year.

6th. The amount of goods made in 1860 was, in pounds, about 5,000,000; and, in 1878, about 7,000,000. The comparative value of our goods in 1860 and 1878 is stated in my answer to question 1.

With great respect, very truly, yours,

Hon. A. S. HEWITT,

Chairman of the Congressional Labor Committee.

WM. P. HAINES.

Condensed statement of the business of Durham Iron Works from January 1, 1874, to June

Year.

30, 1878.