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this hostility manifested toward capital. I do not believe that there is any necessity for any antagonism between capital and labor; there should not be; there should be the most intimate union between the two. They are, to a certain extent, and, indeed, to a very large extent, dependent the one on the other. They must live in harmony, or there will result an injury to society. That is my idea.
The CHAIRMAN. Are they not living in harmony, in your judgment, so far as the great mass of operations in society is concerned? If youestimate by percentages, for example, the amount of discord that there is between the two, would you not estimate that by far the largest percentage of capital and labor is living in absolute harmony now?
Mr. Moody. I believe that in the mass they are living in all the harmony that can possibly exist under the present conditions of business.
The CHAIRMAN. Then give us the disturbing causes which you think prevent their living in absolute harmony.
Mr. Moody. You will recollect, Mr. Chairman, that in the little volume which I handed you a short time since, I made that very point with reference to harmony. I say in it that I do not believe that those industrial difficulties find their sources in the purposes or designs of any class or portion of our people. They grow out of the changes that have taken place in our industrial condition mainly during the present century. This is a fact which, although it may be known to a great many, has not entered as a factor into the consideration of this matter. All our methods of labor, all our modes and means of production, have radically changed during this present century. Where, at the beginning of this century, everything was produced by muscular force and action, now substantially everything is produced by the mechanical forces.
The CHAIRMAN. Are we to understand you as regarding that as a beneficent state of things, or the reverse ?
Mr. Moody. Properly used it is a beneficent state of things. I look upon machinery as having a mission; there is a gospel in it. It is this: A less amount of human toil for a mere existence, a greater abundance of comfort for all, and a higher development. But, if improperly used, it produces the very condition of things under which we are suffering, demoralization and transition in all interests.
The CHAIRMAN. Be good enough to specify what you regard as the improper use of machinery
Mr. MOODY. The improper use of machinery is to use it in such a manner as to require the employment of only a portion of the available muscular force, and throwing the other portion into idleness.
The CHAIRMAN. Is not the first effect of the introduction of machinery always to put somebody into idleness?
Mr. Moody. The first effect and the ultimate effect of it is. The ('HAIRMAN. But if the first effect of machinery is so, and if, as you say, machinery should not be used so as to put any portion of the community into idleness, how will you ever get machinery introdnced into the methods of society?
Mr. Moody. The term "ever," as you use it, may be a short period or a very long period.
The C'HAIRMAX. I mean at any time. You say that machinery must not be allowed to displace the human muscle, and I ask you whether the introduction of new machinery has not always for its tirst effect the displacement of human muscle?
Mr. MOODY. It has.
Mr. Moody. We must adapt the use of machinery and the use of human muscle to each other.
The CHAIRMAX. Would you limit the use of machinery; is that your point ?
Mr. Moody. I will have to answer that question by an illustration. If a dozen men (using that number as representing the mass) by the use of the unaided muscle produce sufficient for the dozen, and if, by the application of new motors or new forces, it is found that six of the dozen may produce an abundance for the twelve, then, necessarily the time of the use of that force must be shortened by one-half, so as to keep the whole twelve employed. It is a mere qnestion of arithmetic.
The CHAIRMAN. I know that it is a question of arithmetic, but I want to arrive at the practical way out of the difficulty. How would you meet the difficulty or provide for the six unemployed ? Would you compel machinery to work less time so that the whole twelve could have full employment !
Mr. Moody. Precisely. I would do that very thing.
Mr. Moody. In that respect I would limit the use of machinery; but, in another respect I should double the use of machinery, because, by that very thing double the amount of machinery would be required.
The CHAIRMAX. But what would be the object of expending capital in the construction of double the amount of machinery when one-half of the machinery would be able to do the work?
Mr. Moody. The object would be this: the capital of the community is this frnit which I have been speaking of in the first part of my examination which comes out of labor, and these twelve (the whole number) must be kept employed in order that there may be fruit gathered from the whole twelve to form the body of capital.
The CHAIRMAN. Let me get my point before you so that you can understand it. It would require twice as much capital, would it not, to duplicate the machinery as if you had only one-half the amount of machinery ?
Mr. Moody. True.
Mr. Moody. What should I understand by your use of the term “husbanded and economized”?
The CHAIRMAN. That is to say, that it should not be expended in a wasteful manner, or for any useless purpose. Now, would it not be a wasteful and useless expenditure of capital to build twice the quantity of machinery that is necessary to do a given amount of work:
Mr. Moody. No, sir. Capital is needed to be gathered and garnered, but not to remain dormant. When capital is used in that manner it becomes an injury. Capital is useful and is a blessing when it is active—when it is used and turned over-and the more frequently it is turned over in business the greater the benefit of it. And one means of this turning over of capital is in the construction and development of machinery.
The CHAIRMAX. But there is not too much capital, is there, for the wants of society! We have not got more capital than we need?
Mr. Moody. I have never discovered anybody who had.
The CHAIRMAN: Neither have I. That being so, there must be practically an unlimited field for the use of capital. Now, if any portion of capital is absorbed in the building of machinery, unnecessarily (because the existing machinery is sufficient to do all the necessary work), have you not withdrawn capital from some useful field and applied it to some useless purpose ?
Mr. MOODY. The construction of machinery or the construction of means by which men shall be employed cannot by any means be termed a useless investment.
The CHAIRMAX. I am an iron manufacturer. I have got a blast-furnace. I can run that blast-furnace with one steam-engine. That is all it wants. Then I find some idle people around me, and I say, "Here is capital, or I can borrow it; let me build another steam-engine to employ those idle laborers.” I have then two steam-engines, one rnnning for twelve hours and the other for twelve hours. Now have I not put that amount of capital to a useless purpose !
Mr. Moody. Undoubtedly you have in the way you put your question. But it must be kept in view, all the time, that the mass of the people must be employed in order to have a market or demand for the production of your one or two engines. You find your market for everything that is produced solely in the people. Now when, by using your one engine solely, you deprive one or more persons of entployment, to just exactly that extent do you destroy your own market. And that is exactly what is being done at the present time. Our markets are destroyed because half of the people are absolutely without the means of entering into the market to buy our products. Now if you have capital, you want to use it, not to bury it, as the man did his one talent. You want to put it to use so that you may get usance out of it. The only way that you can do so is by putting it into business; the only way you can put it into business is by creating a market for your products; the only way that you can create a market for your products is by giving to the mass of the people the means to buy; and the only way that they can get the means to buy and consume your products is by obtaining work.
The CHAIRMAN. Suppose that instead of expending my money in building an engine which I do not want, I had employed the same amount of capital in the production of something which I did want and could use, would I not have employed the labor just as well, and would it not have been a useful instead of an unnecessary and useless expenditure of capital?
Mr. Moody. Undoubtedly that would be the case your question carrying with it the idea that that something else would require muscular force, would require the employment of the people. If that something else can be found, or if you can put your capital into something else, we will have that result of course, and the same end will be attained.
The CHAIRMAN. Then what you want is to see capital employed, and you agree that when it is employed for a useful instead of a useless purpose, it is the rightful application of capital?
Mr. Moody. You cannot call the employment of capital when it is used in a way that will give employment a useless application of capital.
The CHAIRMAN. We are supplied in New York (as you are in Boston) with water by means of aqueducts, steam-engines, &c. That gives to every inhabitant of the city of New York the water he wants. Now suppose that we have fifty thousand or one hundred thousand idle people in the city of New York, and suppose that we employ a line of buckets from Croton Lake to the city of New York and put all this crowd of idle people to pass down the buckets. That would employ muscular labor and would dispense with the use of machinery and would accomplish all the purposes desired. It would employ labor, supply water, and the calamity which you have depicted in the non-employment of labor would have passed away.
Mr. MOODY. And you would still have retained men where there can be no advancement; you would still have kept them down to the point of continuous employment, unresting, without a chance for recuperation, without a chance for rest, without a chance for development. I think your aqueduct illustration is not by any means a good one. If, on the other hand, instead of putting these unemployed persons to something which is not necessary, you would shorten the hours of labor, you would still have kept all employed, your capital would be still invested, and your market would be protected.
The CHAIRMAN. But would not the result be exactly the same thing if I built machinery for which I had no earthly use, having an existing machinery that could do all the work necessary? Is not that exactly a parallel case with the aqueduct! You require me to build another set of machinery because it will employ men usefully, My answer is that it is unnecessary; that it is an expenditure of capital which could be applied to some better and more useful purpose, and I do not see, with all due respect to you, that you have solved that difficulty at all. I should be glad to see capital employed usefully. If I needed another steam-engine I should build it; but, certainly, there is no law, human or divine, that should compel me to build a steamengine that I do not want. I am putting that as an illustration.
Mr. Moody. I would like to see in what other way unemployed labor can be employed.
The CHAIRMAX. That is exactly the information which we understood you to be coming here to give us, and that is the information which the members of this committee are very anxious to get. We do not know how it is. We are in a state of ignorance on the subject. You tell us to stop a portion of the existing machinery, and to build some more to do the work which can be done by the existing machinery.
Mr. MOODY. I do not tell you to stop a portion of the machinery. I say, keep all the machinery that we have employed. Here is half the community substantially idle. Half of our market is gone on account of that idleness. The capital which we have invested at the present time is useless. It is paying nothing on account of this idleness; for it is a fact that the capital which is invested at the present time is being lost, and it is a fact that investments do not pay. It is a fact that our railroads, which have absorbed a greater amount of capital than any other species of investment in this conntry, are paying nothing. Much of our railroad property is becoming hopelessly incumbered, and that is but a fair illustration of all business in this country.
The CHAIRMAX. Tell us what means this committee can recommend to insure the employment of all this machinery and to keep it going all the time. The trouble now is that the people who have got machinery cannot sell their products if they keep their machinery going. What we want to find out is how they can keep their machinery going all the time without loss. At first I understood you to say stop the machinery; now you say do not stop the machinery, but keep it going. It is kept going so much that the manufacturers cannot get rid of their products. That is the difficulty that has been testified to, and, if it was not, I could testify to it myself, for I have personal experience of the fact.
Mr. Moody. Then you are corroborating my statement.
The Witness. There must be some process devised (and it is a simple matter to be derised) by which a demand shall be created for the employment of every one.
The CHAIRMAX. Tell us that very simple method. How are we to do it?
Mr. MOODY. It is a simple question of arithmetic again. If one-half is producing enough for the whole, then the other half is idle and the whole are suffering. This must be turned right around and the whole must be kept at work half the time.
The CHAIRMAX. Then you would stop the machinery for half the time? Mr. MOODY. Let me explain that. I would run machinery as I would run muscle. They are the forces of production. I would use the forces of production and use double the force that we have now. I would double the machinery and I would double the muscle, in order to produce the same quantity that is now produced, and to do it by half the machinery and half the muscle.
The CHAIRMAX. Would you double the machinery when you could accomplish the same result by doubling simply the number of hands that work it? Suppose you run machinery for eight hours and are producing more than you can sell, and there are in consequence a lot of people idle; but suppose you work the people only four hours, would you not then have employed the idle portion of the people
Mr. MOODY. Undoubtedly you would. I was going to remark that it could be accomplished in one other way—by working in what is called shifts-a very common term among the English miners--a means by which two or three or four shifts of men are worked during the day. I think, however, that it would be discovered that there is no sound policy in that.
The CHAIRMAN. What would be the sound policy? That is what we want to get at.
Mr. Moody. The sound policy is to develop our machinery, to develop the mechanical forces to such an extent as requires the employment of all the muscular force in the necessary production.
The CHAIRMAN. Then you would run more machinery?
The CHAIRMAN. What would you do with the products if you would run more machinery, when we cannot now get rid of our products?
Mr. MOODY. I would not run it as it is run now. That is the mistake that you make.
The CHAIRMAN. If you explain what you mean, I will not make the mistake. I do not understand you, and that is the reason why I make the mistake.
Mr. MOODY. I would run the machinery in proportion to the additional employment of muscle and in strict regard to its power of development.
The CHAIRMAN. That is, if there are idle men you would run less machinery or more machinery-which ?
Mr. Moody. I would run more,
Mr. Moody. I have stated it distinctly so. I would reduce the hours for the working of machinery to the same extent to which I would reduce the muscular force. They should be used in unison.
The CHAIRMAN. Take my blast-furnace for an example again. We have got to run the steam-engine twenty-four hours a day. We cannot help ourselves. We must run it twenty-four hours, if we run it at all. How am I to reduce the time that that engine runs unless by building another engine and investing capital in it when that is entirely unnecessary ?
Mr. MOODY. Instead of investing it unnecessarily you have invested a little more capital by which that already invested is made more profitable.
The CHAIRMAN. What I have now is sufficient for the purpose. If I build another engine, then instead of utilizing my capital I have wasted it.
Mr. Moody. But if you do not build any engine but the first one, then you have yourself testified that the capital which you have invested in it is paying no interest, and that the business is becoming bankrupt.
The CHAIRMAX. As a matter of fact the business is now unproductive, and, under that state of things, you ask me to build another steam-engine.
Mr. Moody. I ask you to build another steam-engine in order that the capital which you have at present invested shall be turned to profit by increasing the consumption among the million.
The Chairman. That is to say, the unemployed labor being thus set to work, I will be able to dispose of my surplus product of pig-iron!
Mr. Moody. It will undoubtedly have that effect.
The CHAIRMAN. And that is your solution of the problem. Let me say to you, as a matter of fact about blast-furnaces, that one engine does all the work that could be done by two engines. Now, why should I be compelled to build another engine! You say, in order to employ labor. I cannot afford to employ any more labor, because the labor that I now employ is unprofitable to me.
Mr. MOODY. I am glad that you have cited the case of blast-furnaces and of iron manufactures. We have now in this country some 700 blast-furnaces, of which only about one-third, or less than one-half, are employed, and the third, or the fraction that are employed, are selling their products at present at a figure lower than they have been sold I think at any previous time.
The CHAIRMAN. Certainly as low.
Mr. Moody. The prices are down to the very lowest possible figure, so low that there is very little profit being yielded to any of those in operation, and I rather think that some of them are running at a loss. The CHAIRMAN. Almost all of them are. I will confirm what yon say in that respect. Mr. Moody. Now what you want is to know how those mills that are running can
be run at a profit, and how the 500 blast-furnaces that are not running can be set to work.
The CHAIRMAX. That is what we want to know.
Mr. MOODY. I hardly think it can be done by building new blast-furnaces, but it must be done by this process of shortening the time of employment of the mass of the people, not of any particular class.
The CHAIRMAN. Do you not know that it is made a subject of great, grierous complaint that one portion of the community has to work ten or twelve hours a day, while other portions have to work only six or eight?
Mr. Moody. I grant you that, and therefore I say that this thing is not local but it is national, and that is the reason why I am before this committee.
The CHAIRMAN. But you do not show us how we are to absorb this unemployed labor profitably when we camot profitably employ the labor we have already got.
Mr. Moody. You cannot employ profitably the labor you have already got, because of the weakness (I think that is the commercial term) of the market, because there is no demand for your products.
The CHAIRMAN. There is more pig-iron produced than there is any, demand for.
Mr. Moody. I know there is. Now the only possible way in which the present investments can be made profitable, or rather in which the present running of mills can be made profitable, and by which others can be set to running at a profit, is by strengthening the market.
The CHAIRMAN. Will you strengthen the market by adding to the supply?
The CHAIRMAN. How are you going to get up the demand which must precede the increase of the supply?
Mr. Moody. I was getting to that very point. When we find one-half of the consumers absolutely wanting this pig-iron or this food or this raiment, or whatever it may be, and not being able to obtain it for want of the means of purchasing (which can be obtained only by labor), then we must commence at the very groundwork and devise the means by which labor can be obtained.
The CHAIRMAX. Now tell us what that means. That is the very pith of this investigation.
Mr. Moody. That is the very point. Let us get a little farther in this problem.
The CHAIRMAN. O, no; do not go away from this point, if you please. You have been there three times already, and if you tell us the means by which this surplus labor may be employed, and especially how Congress can contribute to that result, you will have solved our problem and done a very great service to the public.
Mr. MOODY. I think that whoever can succeed in convincing this committee will also have done some service.
The CHAIRMAN. Thank you.
Mr. MOODY. But perhaps there may be a slight difference between solving the problem and convincing this committee.
The CHAIRMAN. Let the public judge, because the public is going to hold this committee to judgment.
Mr. Moody. That is the great inqnest I know—the grand jury.
Mr. MOODY. What am going to say is so intimately connected with it that you must let me state it first.
The CHAIRMAN. I will submit to my colleagues on the committee the question whether you shall be allowed to wander away from the very point when we have got to it. You tell ns that the matter is very simple, and that it is as easily explained as a little sum in arithmetic, and then you want to go off to another topic.
Mr. MOODY. I will confine myself to this point.
Mr. Moody. The weakness of the market is because of non-consumption by the masses. This non-consumption by the masses does not result from any taste on their part, or from choice. It results from their poor condition. The market can only be strengthened by advancing the means by which all shall take part in the labor to be done. That is the very heart of the proposition. There is a certain amount of labor to be done to provide for all, whether in pig-iron, in textiles, or in anything else. All must take part in that production, in order to be able to take part in the consumption. Now there is a certain amount of production required from all. If this certain amount is produced by the industry of half the forces, muscular and mechanical, that we have at our command, then necessarily there is one-half of those forces unemployed, and the market is destroyed.
The CHAIRMAN. Tell ns how we are to set that unemployed half at work.
Mr. Moody. By dividing the work among the whole, and giving half time to the whole of the employés.
The CHAIRMAN. Would not that increase the cost of production? Mr. MOODY. That is a matter of not the slightest consequence, whether it increases the cost of production or not.