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but some people are working ten hours a day; and if you cut the hours of labor down to eight hours, that will increase the demand for labor 20 per cent."

Mr. White. That is a request that you shall infringe on the liberty of somebody else.

The CHAIRMAN. Infringing on liberty is a very general phrase. What I want to know is this: What would be the effect on the man who works ten hours a day! Could he get as much for eight hours a day as he gets for ten hours? Would not this take away a portion of his earnings in order that another man might have that portion?

Mr. WHITE. If his hours work is a constant qnantity, that would diminish his wages 20 per cent.

The CHAIRMAN. And it would be compelling laloring men who are now in employ. ment to support those who are out of work?

Mr. WHITE. It would transfer a portion of their wages.

The CHAIRMAN. And a transfer of a portion of the wages would be a reduction of the necessaries and comforts of life?

Mr. WHITE. Yes.

The CHAIRMAN. Could that plan be made, by any possibility, to touch the capita! ists?

Mr. WHITE. I do not think it could. What the capitalist gets now is just what he eats and drinks and wears from day to day.

The CHAIRMAN. Can we, by any method of legislation, transfer any portion of the revenue or income of capitalists to the working classes? Can you suggest any method by which that can be done? Here is a fact. There are a great many rich people in New York with superfluous wealth; and there are a great many poor people without enough to eat. Is there any mode of legislation by which to transfer a portion of the superfluous wealth from the one class to the other class ?

Mr. White. My observation has been that every legislative attempt to transfer capital from the rich to the poor has resulted in making the rich richer and the poor poorer, hecanse the rich always understand how to take advantage of such acts of legislation, and they always do it, and they always have the means to do it. The poor man cannot. He can simply take what comes to him in the way of wages.

The CHAIRMAN. It is suggested that we might meet the difficulty by colonizing a portion of the surplus labor on the public lands. The difticulty now is that the poor have not means to go on the public lands, or the means to live there when they do go until the land becomes productive. Do you think that we can (with our right under the Constitution to administer the public lands for the public good) appropriate the proceeds of the sale of the public lands to colonization purposes! Can that be done with allvantage to the community!

Mr. White. I am obliged to say that I do not think so. What assurance have you, when you have given a man $500 to go and settle on the public lands, perhaps 1,50 miles from here and ten miles from a town or railway station, that the $500 will he devoted to that purpose ?

The ChairmAN. The proposition is that government shall organize the colonies, shall superintend the transfer and establishment of the colonists until the colonies are in successful operation. There have been propositions to give everybody $500 apieer and make everybody happy; but that is not this proposition. Why cannot this government go on and establish colonies just as the governments of England, Prussia, Russia, and other countries have done?

Mr. White. I should think that it would be a hazardous thing for our government with its present civil service machinery to undertake that task.

The CHAIRMAX. Do you hold that we have not got a good civil service now!
Mr. WHITE. I do.
The CHAIRMAN. I thought that we had reformed all that!

Mr. WHITE. As you reside in Washington and I do not, probably you have better information on that subject than I have. I have not observed the reform.

Mr. Rice. It has been a reform only in a small part of the civil service, perhaps-only applying to the House of Representatives.

Mr. WHITE. To come back to this subject. It deserves some serious consideration. That would be a charitable enterprise. It is something like the issuing of tents and rations for the relief of the sick people in the South. That is on a very small scale, of course, and this proposition is on a large scale. It is to be justified as any other charitable enterprise conducted by government is to be justified.

The CHAIRMAN. Is it not to be distinguished from charitable enterprises in this: that the government holds these lands for the people; and, if the man who makes two blades of grass grow where one blade grew before is a benefactor, then the government is actually improving the condition of the people, and enlarging the sources of wealth by turning the lands into use. Is not that one of the things that the government has a right to do?

Mr. WHITE. The government has offered these lands to the public for years for nothing:

The CHAIRMAN. We know that, and the lands are being settled very rapidly; but, what is wanted is to do something for the relief of this surplus population in cities. Is it the kind of population that cau hope to succeed by being transferred to the wild lands of the West ?

Mr. White. No, I think not. I think that this particular class of people who are demanding government help, and the payment of the bonds in greenbacks, and the division of property, and all that sort of thing, are people whom you could not draw to the public lands with a yoke of oxen. And if you once got them there you could not keep them there. That kind of life would be intolerable to them. I do not mean to say that there are not a great many who would be glad to go upon the public lands if they could get there and could get enough to live upon for one year; but I mean to say that the class who are making this noise, this clamor, and who are denouncing the bondholders and denouncing the government for what they call the contraction of the currency, could never be colonized upon the public lands at all; at all events they could not be held there.

Mr. Rice. That is, you think that there is a class in society which, whenever a crisis comes, niust inevitably suffer?

Mr. WHITE. I think so decidedly. The whole history of the world shows it. During the English crisis of 1825 the streets of Norwich, Bradford, and Sunderland were actually filled with starving people.

Mr. ŘICE. Suppose the English Government had had land on which it could have moved these people, would it not have been well to do it! There were some of them perhaps who did not belong to this class that you speak of.

Mr. WHITE. No, sir; they were the industrious poor. But what did the English Government do? By the exercise of its poor-rate system it supported them during the period of distress. It was obliged to do so. A government cannot allow anybody to starve. That was a charitable undertaking.

Mr. Rice. It is the duty of government at all events to keep the members of society from starving?

Mr. WHITE. Yes; and it is my duty to relieve distress when it comes in my way. It is the duty of government, when the distress becomes so great as cannot be dealt with by private charity, to deal with it publicly. And the government (I refer, of course, to the State governments) discharges that duty now. Of course the Federal Government has little or nothing to do with it.

The CHAIRMAN. I understand you to sum up this whole thing by saying, as far as legislation is concerned, that any interference with the progress of resnmption to specie payment would be injurious to the business of the country and to the laboring classes?

Mr. WHITE. Yes, sir. The CHAIRMAX. And also that the tariff might be modified to very great advantage by removing the duties on raw materials ?

Mr. WHITE. Yes; by removing the duties on raw materials and all other duties that tend to interfere with the processes of production.

The CHAIRMAN. You would like to see the utmost fairness in commercial operations, and you would raise the revenue of the government from luxuries and not from necessaries?

Mr. White. Yes, speaking generally; and I think that this country is in a position (perhaps not immediately but gradually) to compete with Great Britain, or any other country, not in the production of everything, but in manufacturing industries generally. I do not mean to say that there may not be things which England will always produce better than they can be produced here, but I mean to say that, as a manufacturing conntry, this country has the accumulated capital, the skill, the machinery, and the individual genius to compete with England, not only on our own soil but in foreign countries also.

The CHAIRMAN. Do you think that there is more relative employment for the working classes under a free-trade system than under a protective system ?

Mr. WHITE. Yes, sir.
The CHAIRMAX. And that they are better off ?
Mr. WHITE. Yes, sir.
The CHAIRMAX. If you wish to add anything to what you have said, the committee
will be glad to hear yon.

Mr. WHITE. No, sir; I do not think of anything else at present. Subsequently Mr. White asked permission to add to his testimony the following: I think that the most effective local cause of the commercial crisis was the rebound which took place in the development of the country very soon after the close of the war. There is a certain normal rate of development and improvement going on in the country from year to year, which may be lessened or accelerated at different periods, by a variety of causes. This normal rate of progress was interrupted during the war, not by the destruction of capital, but by turning the energies and productive power of the nation into another channel—the channel of war. As an illustration of this I may point to the fact that railway construction fell off largely during the war—the total increase of railway mileage during that period being only 3,273 miles, whereas during the corresponding period of four years preceding (which included the crisis of 1857), the increase was 8,618 miles. When the war ceased there was a four years' interim in the development of the country to be made up. This development was powerfully promoted by the influx of foreign capital and immigration. Foreign capital songht investment largely in our national and railway bonds, and immigration was stimulated by the two great wars in Europe which followed closely after our own. It was also promoted by the disbandment of the million or more of our soldiers who resumed the arts of peace just in time to share in the powerful impulse about to be given to trade and industry. In other words the close of the war found us with a wide field for development and an abundance of labor and capital with which to accomplish it.

This state of things was perfectly calculated to fire the imagination and spirit of enterprise and love of gain of the average Anglo-American, and to bring in an era of high speculative excitement, advancing prices, and eventual panic and crash. This is what I mean by the rebound after the war. The same thing might have taken place without the war, seeing that the same attractive field for development would have existed in either case, seeing also that similar crises have occurred here and else. where without any antecedent war. But I think the series of events here mentioned may be rightly classed as local causes of our share in the crisis of 1873.

In further reply to the interrogatory of the chairman whether circulating capital was converted too rapidly into fixed capital prior to the panic, I desire to remark that circulating capital, instead of diminishing, was steadily increasing during this period, as shown by the deposits of the national banks, which rose from $579,000,000 in 1968 10 $622,000,000 in 1873. During the same period the loans and discounts of the same banks rose from $657,000,000 to $940,000,000. It is impossible for a country at any time to convert into fixed capital more than its surplus of floating, or circulating, capital, and I cannot see how any harm is to result from using its surplus in that way. To turn any more than its surplus into fixed capital would be to starve a portion of its inhabitants, or reduce them to a lower scale of living than they have been accustomed to. Such was not the spectacle witnessed prior to the panic. On the contrary the scale of living was higher then among all classes than it has been since.


NEW YORK, August 24, 1878. Mr. John J. HIXCHMAN appeared before the committee and stated, in answer to the chairman, that he resided in Brooklyn; that he was not now engaged in business, but that he had been for many years a merchant in New York; and that he was now temporarily out of business.

The CHAIRMAN. Have you undertaken to solve this problem which puzzles so many wise people as to what has caused the present depression in business?

Mr. HINCHMAN. Like most persons I have thought over the subject and have arrived at my own conclusion, both in regard to the causes and the remedies. But I do not appear before the committee, either to submit a theory of canses, or to suggest a remedy. I appear before the committee for the purpose of submitting some facts bearing on the subject; and, if they be found pertinent, the probability is that they will suggest a cause and a remedy. The tables and statistics which I have, and which I shall present to the committee, were suggested to me about two years ago in conversation with a gentleman of considerable reputation as a political economist and financier. He submitted to me two or three propositions which had been made to him in regard to the causes and remedies for the present distress in business. One of them, as I remember, was a proposition by the writer that the holders of bonds, the receivers of interest, who had made their contracts when times were flush and when interest rates were high, should voluntarily come forward and relinquish a part of their interest—that they should take five per cent., instead of seven, or four per cent. instead of six, so that those doing business on borrowed money would have a little lee-way for profit. He thought that that would stimulate production, and set things going on again. The other gentleman thought that the trouble in regard to the withdrawal of confidence by capitalists was, that business morality had become so low that capitalists were afraid to venture, and that they withdrew their money. He proposed that we should all become very good and virtuous, so as to restore this confidence and let business go on.

The gentleman who submitted the suggestions to me asked my opinion of them. I told him that they were of about as much value as hundreds of others that I had seen,

and that there were no figures to express their value. Like everybody else, I had a theory of my own. I had not seen it suggested; but I suggested it to him. It was that we should go to work. This was a matter of correspondence. I got no reply to that, but I can imagine that he would say, “That appears like a joke. Our warehouses and markets are stuffed with goods; and people are becoming idle in consequence of that state of things.” I should have suggested in reply to that, perhaps, that we had made too much of certain things and too little of other things. But having made the remark at a guess I felt inclined to fortify myself in regard to it, and I took the best statistics that were comeatable—the United States census reports—and collated several of the different classes of business. The result was that my conclusion was entirely confirmed. The first classification that I made had special reference to agriculture. In that I selected 37 of the articles of largest production in the United States; and, if agreeable to the committee, I will submit the result and make some remarks upon it as we proceed.

The CHAIRMAN. That would be the best form. But perhaps you had better state in advance what your conclusion was.

Mr. HINCHMAN. I have stated it in my remarks.
The CHAIRMAN. Please to state it again.

Mr. HINCHMAN. That in a great country like this, with varied and vast resources, if labor be properly organized, there never should be a case in which there would not be work for everybody able and willing to work.

The CHAIRMAN. When you say properly organized you mean properly destributed !

Mr. HINCHMAN. Yes; properly distributed. It is a mere difference in the use of the term. My theory was that, from the exigencies of the war; from the great destruction of property which ensued in the prosecntion of the war; from the change in the standard of value from gold to paper, and with that fluctuating from day to day according to the chances of war; and from the large disbursement of money immediately subse. quent to the war in paying off the Army, a demand was produced among those who received the money for large quantities of goods, and that this made trade prosperous and times flush. A great many people were growing rich who had been in moderate circumstances, and that led to extravagant expenditure.

The CHAIRMAN. You are aware, I suppose, that immediately after the war, in 1866–67, there was an era of very considerable depressiou in business?

Mr. HINCHMAN. There was an immediate depression in the summer of 1865, after the war had closed. Gold went for a short time down to 22. The people were apprehensive (as I was, I must confess) that we were rapidly going down to a gold standard, and that property which had been held at high prices (rated in greenbacks) would have to be sold off at the gold value, and that those who had property and owed money upon it would be obliged to pay in gold, whereas they had promised themselves to pay in greenbacks. That depression in gold was very short-lived. Gold began to rise again, and in a short time it got up to 25, 30, 35, 40, and occasionally during the fall of the year 1865–66 to 45. I was in the drygoods business in 1866. That year was (all things considered) the best year in that line of business (and I imagine in others) that the city of New York had ever known. There was more solid money made by the merchants of New York City in that year than in any year during the war.

The CHAIRMAN. How was it in 1867 ?
Mr. HINCHMAN. Things began sliding off again.
The CHAIRMAN. I know that it was a bad year for the iron business.
Mr. HINCHMAN. The years 1867, '68, '69, and '70 were years of gradual subsidence.

The CHAIRMAN. Then your idea was that the period immediately subsequent to the war (1865–66) was an era of considerable prosperity, and was followed by an era of temporary prosperity, and that that was followed again by an era of speculation !

Mr. HINCHMAN. Yes. My theory was that the inducement to high living and extravagance, the feeling of riches which had resided in the minds of many people who had been previously in comparatively moderate circumstances, had, to a great extent, caused them to change their style of living. Many people who had been before industrious felt rich enough to retire and to live upon their means. Others who had lived moderately felt that they might indulge in some additional comforts and in a better style of living. That induced an extravagance which of course brought its supply of articles adapted to that style of living; and, as in this or any other country there are only a certain number of workers, those who withdrew from business were necessarily withdrawn from that number. My first inquiry based upon that opinion was into the condition of agriculture, and, as I have said, I collated 37 items of iargest production in the United States in the years 1850, 1860, and 1870. I went back to 1850 in order to get a starting-point, so as to see the course of agriculture in a period of normal prosperity as compared with what was certainly a very irregular period-from 1860 to 1870. The result of that is, according to my notes, that from 1850 to 1860 there were but three articles out of the thirty-seven enumerated which showed a losswhich may have been owing to a special reason, or may have been only temporary. The year 1860, as compared with the previous years, might not have been a favorable year for any one of those three articles. They were rice, sugar, and home products. These had decreased from 1850 to 1860. There were eight articles out of the thirty-seven that had not kept pace with the progress of population.

The CHAIRMAN. In making your comparisons you first established the rate of increase of population, and then you undertook to ascertain, by comparing the rate of increase of those products with the rate of increase of population, whether there was a corresponding rate of increase, or whether they had fallen off-not in the gross production, but in the rate of increase.

Mr. HINCHMAN. There was a falling off in the gross production of those three articles, rice, sugar, and home-made prodncts. From 1850 to 1860 there was a falling off in the production of eight articles out of the thirty-seven relatively to the increase of the population. The increase of population'was about 354 per cent., and (giving 1860 the benefit of that 35 per cent. increase) there were eight articles which had not kept pace with the increase of population. These were sheep, swine, oats, rice, wool, maple sngar, sugar, and home-inade products. All the other twenty-six articles out of the thirty-seven had not only kept pace with the increase of population from 1850 to 1860, but had overrun that increase-some of them to a very large extent. From 1860 to 1870 there were eighteen articles out of the thirty-seven which had absolutely fallen short in gross products. These were peat cattle, mules, swine, rye, corn, rice, tobacco, cotton, buckwheat, sweet potatoes, pease and beans, clover-seed, grass-seed, hemp, sugar, maple sugar, honey, and home made-products. There were twenty-four. out of the thirty-seven which fell short ratably. The increase of population between 1860 and 1870 was about 227 per cent. Of the thirty-seven articles enumerated, twenty-four of them showed a ratable loss; these being (in addition to the eighteen named) acres in farms, improved acres, horses, cheese, butter, and market gardening. These facts appeared to establish to my mind conclusively the fact that whereas we had been largely increasing our production of manufactured goods, which are mostly ephemeral in their character (made for mere consumption, use, and enjoyment), we had neglected the substantial improvement, that remain and inure to the growth of the country.

The CHAIRMAN. But we must have produced food enough. We imported no food during that year.

Mr. HINCHMAN. We produced more than we required.
The CHAIRMAN. Then it was simply a question of the application of surplus labor!

Mr. HINCHMAN. Yes; I assume that we could have found a market at paying prices for about all the food that we could reasonably produce under any state of circumstances, and if we could not find it abroad we could use it at home in other ways. I attended the examination of Professor Sumner here the other day, when some remark was made in regard to the effect of putting a wall around the United States. I do not recollect the exact application of it; but I will use the same figure and say that, if that was done, we might lose some of the comforts which we draw from the outside world—tea, coffee, spices, and things that we do not produce ourselves but we would still have, within our own territory, food of great variety and abundance, material for making clothing of every description, material for building houses and for supplying every real want and comfort known to mankind. That is to say, in the ordinary or ganization of society, food is the first requisite. Put a certain number of able-bodied men down in a temperate climate where they can live for one day, and the probability is they would subsist and iminediately begin to increase and make a subsistence for the future, that is, the commodities necessary for life and comfort which we call capital. After the food is provided, and if it can be provided in larger quantity than the community requires, the next step is to find clothing: Of course there would be clothing in a temperate climate. Clothing being provided, the next reqnisite would be shelter. Now, in a community so organized, the proper adjustment of raisers of food, makers of clothing, builders of houses, makers of roads and of the various things which go to constitute the conveniences of civilized life, would also ensue, so that really we could, in the United States, live well and luxuriously, and not have to send outside for a single article. We should miss, however, the enlightening and intellectual results of intercourse with the rest of the world; and, of course, we could not afford to dispense with that. We might lose a few of the luxuries. These we could dispense with. But as a matter of fact there is in the United States everything requisite for the largest comfort ; and all that the inhabitants would have to do would be to suit their labor to their needs, to work just as much as was requisite for their wants.

The CHAIRMAN. That being so, what deduction do you draw from it!

Mr. HINCHMAN. The point which I wish to make is this, that there is in the United States opportunity for labor if it is properly adjusted; that the instincts and tastes of men will generally lead them to seek those things which are most profitable to them and most conducive to their welfare; and that in the United States, if our labor were properly adjusted we should have abundance for all and work for all. The abundance of a country allows more or less to live a life of ease. There always will be those

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