THE PROBLEMS OF PEACE 658 4 G3 py 1 A Study of tne Essential Needs of Massachusetts During tLe Reconstruction Period NATIONAL SHAWMUT BANK 40 WATER STREET BOSTON THE PROBLEMS OF PEACE COPYRIGHT, 1918 NATIONAL SHAWMUT BANK DEC i G QtC 1 ©CLA508620 "V-r3 I THE PROBLEMS OF PEACE Mr. William A. Gaston, Chairman of the Board of Directors of the National Shawmut Bank, who was selected to organize the government's war labor program in Massachusetts, and was engaged in this work from November, 1917 to August, 1918, has written the results of his experience and observation as to the more important needs of Massachusetts during the reconstruction period. Mr. Gaston does not press for particular rem- edies or methods but wishes to interest the people of Massachusetts in the real need of constructive action. With that purpose this pamphlet is issued. NATIONAL SHAWMUT BANK Alfred L. Aiken. President INTRODUCTION. TNTRICATE and important as were the problems of war •*- preparation and participation, it is likely that in the end they may seem simple compared to the difficulties which face us in its readjustment to normal peace conditions. The obstacles in the way of a military victory have been overcome because of the fact that there were no differences of opinion as to the main object to be attained. Individual and party theories as to economic and administrative policies have been subordinated for the successful accomplishment of the end in view. The world will never again return to where it was four years ago. What is called conservative opinion must modify its aims to include the best part of what is called radical policy. On the other hand, radicalism, as shown by its inevitable results when put in actual practice, as to-day in Russia, where the radicals have taken the property of the nation without law, is an even greater menace than the militarism now justly defeated in this great war. It is a time for tolerance, of getting together, and in the compromise of opinion to work out a reasonable and saving program. The United States, which gave real democracy to the world, has during the last fourteen decades, shown that under it, real progress never before witnessed in the history of the world was possible. During the war the American people generally refused to give serious consideration to reconstruction problems because of the fear that this might divert them from the immediate prosecution and winning of the war, and as a result we are as unprepared for peace as we were for war. The purpose of this pamphlet is to direct attention not solely to the larger questions of reconstruction now being considered the world over, but especially to the not less important because purely local problems which are necessary to understand and to remedy that Massachusetts may bold its own in after the war competition. The great banks of the United States have for the last ten years been pioneers in the stimulation of our foreign trade program. The banks are not alone the trusted custodians of the people's funds, but are confidants and advisers of the business man, who looks to them not only for financial assistance but for information. The task of organizing the war labor program of the nation for Masssachusetts, which was given to me on its in- ception and which I held for the nine months following, gave me opportunity to study the problems of the labor demobiliza- tion, and industrial reconstruction on a peace basis; one of the most important tasks now before us. It is in a spirit of suggestion, not to press for particular remedies or special methods, but solely to arouse the people of Massa- chusetts to the consciousness of a real need, that this pamphlet is issued. William A. Gaston. RAILROAD TRANSPORTATION. The patriotic desire of the American people to win the war proved that a republic can adopt strong measures to accomplish necessary ends. Sectional rivalries and individual competition were put aside. The government was encouraged to assume the direction of business, and to control not only the trade but the habits of the people. The test of the per- manence of our institutions is now to be whether its machinery can stand the strain which reconstruction is about to put upon it. Reasonable selfishness is the mainspring of progress, and after the war individual competition in the contest for industrial supremacy will naturally be resumed. While we are a union of states, these states are legitimately competing against each other for business precedence. New England, for the first eighty years of our national life, the undisputed leader in industry: with the growth and shifting of population, has been largely isolated from the source of raw materials for manufacture, and likewise from its markets. For more than thirty years thoughtful men in Massachusetts have realized that unless something was done to improve the transportation handi- caps under which Massachusetts labored we would be increas- ingly at a competitive disadvantage, not alone for home but for foreign trade. More than a score of commissions which included in their membership a large number of practical experts, have reported from time to time on this matter, all in practical agreement as to the great need for action by Massachusetts. In 191 1 nine million dollars were appropriated by the Com- monwealth to put a port program into effect. The ' subse- quent separation of the Boston & Maine and the New Haven railroads nullified the expenditures made or contemplated, which were based on the theory that this merger was to be permanent. In 1 91 5 the legislature passed an act proposed by the then Board of Port Directors, creating a new harbor line, which 7 defined the future progress of port development as the needs arise and financial resources of the state permit. The value of this plan was that it included the best ideas of the score or more of the plans for port development reported by the various commissions which had studied this matter during the past generation. The acceptance by the U. S. Harbor Board, com- posed of engineer officers in the U. S. War Department, of the legislative act of 191 5, enables the state or nation to proceed to develop its most important natural asset to capacity without danger that the fundamentals will later be changed. The purchasing capacity of the people of the United States before the war was not sufficient to keep the manufacturers of this country who had entered into business fully occupied during twelve months of the year. To keep wage earners from unemployment a foreign market had to be found for our surplus manufactured product. The competition of other manufacturing sections in the products of which Massachu- setts was the largest producer has been growing more intense year by year. In 19 16 the National Shawmut Bank published a pamphlet called "The Port of Boston," designed to show that while the production of Massachusetts had increased mod- erately, the comparative growth was not satisfactory. Manu- factured cottons in three southern states had increased by over two thousand per cent, during a period where production of manufactured cotton goods in Massachusetts had increased but one hundred and sixty per cent. Missouri is gradually approaching our annual output of shoes, and the rate of prog- ress shown threatens in a few years, if continued, to pass us. The entrance of the United States into the war, with such wonderful results and achievements, and the transfer of gen- eral industry to war needs, has temporarily halted normal production; while new manufacturing districts of tremendous capacity for war production have been created nearer to the centres of population, which will later be competing with Massachusetts in the normal productions of peace. The taking over of our national transportation systems by the government has been followed by the greater utilization of Boston harbor as a war shipment depot. The U. S. Gov- ernment has purchased the Dry Dock at South Boston, under process of construction at state expense. The largest trans- S shipment warehouse in the world has been built on South Boston flats, purchased from the state by the Government. Taking over the Cape Cod Canal has been recommended favorably to Congress by the administration, thus placing under national control the principal facilities which can and should make Boston harbor one of the greatest ports on this continent. New England has a greater stake in a proper solution of this transportation problem than any other section in the United States, and if it now refuses to recognize its handicaps or neg- lects to protect its resources it cannot long survive the intense rivalry of other sections which do protect them. Considering cost of freight and service, a manufacturer on the East Boston side of Boston harbor, wishing to send goods overseas by a ship at dock on the South Boston side, is at a disadvantage with a competitor in New York state. For ship- pers west of the Hudson river and the Canadian border both sides of the port are available at a single rate. For shippers inside these lines, which means our own people, use of the port of Boston, unless the ships taking their goods are at a pier con- trolled by the railroad on which they happen to be, two rates and long delays are involved. Time and again during the last thirty years, reports of the various commissions have called attention to this obstacle to New England's trade progress without result. The physical condition of Boston's transportation facilities are poorer than can be found in any large terminal in our coun- try. We lack tunnels for transfer purposes, our harbor needs a lighterage system for temporary relief; the terminals of our railroads located in various parts of the city are so situated physically that transfers of freight between them are costly and difficult, when not practically impossible. Nine months after entrance of the United States into war, the government found it a measure of war necessity to take over the railroads. The railroad executives gave their pledge that during the war they would abandon individual and competitive activities, *and the record of freight train opera- tion from January to May inclusive, 191 8, is evidence that for * (Theo. H. Price, Actuary to the U. S. R. R. Administration.) 10 the purpose of supplying our armies at the front this promise has been made good, and what co-ordination of service can do. FREIGHT TRAIN OPERATION JANUARY TO MAY INCLUSIVE. 1918. Increase or decrease. 1918. 1917. Amount. Per cent. Freight train miles 260,754.192 269.227,192 (d) 8,472.731 (d) 3.1 Loaded freight car miles 5.903.2S5.9S5 6,456.154,497 (d) 552.868,512 (d) 8.6 Empty freight car miles 2,620.147,014 2,664.267,262 (d) 44.120.248 (d) 1.7 Total freight car miles — loaded and empty 8,523,442,999 9.120.421,759 (d) 596 (d) 6.5 Freight locomotive miles 304,196,165 315,549,190 (d) 11,353,025 (d) 3.6 Revenue ton miles 154,195.764,273 155,066,696,398 (d) 870,932,125 (d) 6 Non-revenue ton miles 14,156,151,131 14,311,931.058 (d) 155,779,927 (d) 1.1 Average number of freight locomotives in service 30,655 30,264 391 1.3 Average number of freight locomotives in or await- ing shop 4,676 4,455 221 5.0 Average number of freight cars in service 2,379,553 2,282,737 96,816 4.2 Average number of freight cars in or awaiting shop 122,208 127,181 (d) 4,973 (d) 3.9 Home 76,083 96,525 (d) 20,442 (d) 21 Foreign 46,125 30,656 15.469 50.5 Tons per train 646 629 17 2.7 Tons per loaded car 28.5 26.2 2.3 8.8 Average miles per loco- motive per day 65.7 69.1 (d) 3.4 (d) 4.0 Average miles per car per day 23.7 26.4 (d) 2.7 (d) 10 Per cent of empty car miles 30.7 29.2 1.5 5.1 Per cent of freight locomo- V tives in or awaiting shop 15.3 14.7 0.6 4.1 Per cent of freight cars in > or awaiting shop 5.1 5.6 (d) 0.5 (d) 8.9 Revenue ton miles: Per freight locomotive per Month 1,006,007 1,024,754 (d) 18,747 (d) 1.8 Per freight car per Month 12,960 13,5866 (d) 626 (d) 4.6 Average miles operated — single trace 222,670,79 22,251.037 16,042 a (a) Less than one-tenth of one per cent. (d) Decrease. Locally the New Haven is improving its freight yard facilities. The extension which gives the Union Freight Line direct access to the New Haven freight yards over Northern Avenue is in process of building. Transfer between the Grand Junction Line of the Boston & Albany and the New Haven has been improved. But, gen- erally, railroad accommodations, on which New England de- pends to facilitate trade, remain as before the war. As regards the physical condition of our New England railroads an official report made to the Public Service Com- mission, September 19, 191 8, shows road beds and tracks not in satisfactory condition, in many cases dangerous. Many of the bridges are old, poorly designed, lacking the margin of 11 safety demanded by good engineering practice, and wholly unsuited to modern operating conditions. The physical con- dition of stations and other property, while not a menace to public health, is, with respect to cleanliness and general maintenance, not up even to the standards of the past. Large numbers of freight cars are of the wooden under frame type, and on account of age and general condition repeatedly taken out of service for repair. This report further states that the Boston & Maine recently had five hundred and ninety passenger cars of the old all wood type, the age of which can be estimated by the fact that they were equipped only with kerosene lamps. There are but forty miles of rock ballasted track on the New Haven road in this state. Passenger service on our three Boston roads has been reduced by approximately two million miles a year. Embargoes have been frequent, causing great loss to New England industries, which have resulted in the diversion of the business to express companies, and with most unfavorable effect on the passenger service. Any statement of railroad conditions under Federal control would be incomplete without a brief history of the railroads for the last twenty years. The tremendous and in many cases, unproductive railroad development which went on in the United States during the 70's and 8o's was greatly reduced after 1890. Parallel roads competed unnecessarily with each other in the same territory. Claims of unfair dealing by some brought about general laws regulating railroad control, and as transportation conditions grew more difficult and unprofitable the laws regulating them increased. A policy of railway regulation intended to keep railway rates low was adopted. For instance, the Hepburn amend- ment to the Interstate Commerce Law empowered the Inter- state Commerce Commission to fix at its discretion a maxi- mum railway rate satisfactory to it, but it did not give the commission power to fix a reasonable minimum rate, the assumption seemingly being that the commission would always find rates that were too high, but never any that were too low. War proved it was not possible under the laws of com- petition to segregate the business of transportation, and thus try to establish the contradiction that transportation 12 could be efficient or prosperous with an arbitrarily fixed and inflexible basis of rates, and an abnormally flexible range of expense. In an address in New York City six years ago, the late James J. Hill, one of the ablest of American railroad adminis- tratives, pointed out that our national railroad situation had about reached the breaking point. The capitalization per mile of our American railroads, not their actual value, — that is, the total amount of stock and bonds on which interest was to be earned, was the lowest in the world; about one-half as much as in any other country with which comparison was possible, and in some cases only one-third as much. The carrying cost per ton mile haul was less and the number of tons hauled per mile per hour was greater than in any country. Refusal to allow increases in freight and passenger rates, considered with the rising cost of commodity prices, created a situation where unless relief was afforded quickly, railroad bankruptcy was imminent. Investment capital for needed improvement was not available, and new money could not be found for investments under such conditions. The real trouble with transportation was insufficiency of our ter- minals to do the business as it existed then, and which the natural increase in population and business would make worse year by year. The quickness with which water can be emptied out of a bottle depends entirely on the size of its neck, and the terminal facilities, or necks, of all the railroads in the United States were inadequate. All the general con- ditions described by Mr. Hill applied particularly to our New England roads, with this additional disadvantage: the rail- roads in Boston have three separate necks, each inadequate for their own purposes, and utterly so when the needs of the city and the industrial section behind it are concerned. Mr. Hill's statement of facts and plea for relief were dis- regarded. Restrictions on railroads and restrictions in their securities were made more oppressive. After Europe went to war, and for the nine months after our entrance, railroad facilities were taxed to their utmost, and at the end of 191 7 there was what amounted to practically a break-down in trans- portation facilities. The working force had decreased, approxi- mately seven hundred and fifty thousand railroad men having 13 been taken for service in the army and navy, and to build and operate railroads in France. The railroads kept going, work- ing the remaining employees as best they could; tonnage of locomotives and cars was increased; repairs and renewals were neglected, and the inevitable result was shown in em- bargoes and manufacturing plants closed for want of raw PERCENTAGE OF TOTAL EXPORTS SENT FROM NEW YORK AND BOSTON 60 50 40 30 20 gio o u £ L7 YORK — — — — — BOSTON 1 19] LO 1911 1912 1913 1914 1915 1916 19: "Iscal years ending June 30. materials. The fuel supply was inadequate, giving us "heat- less Mondays" and other personal and business inconveniences. When under stress of national war needs the government took over the operation of the railroads in January of this year, an extraordinary reversal of official attitude was shown. Practically all the measures of relief which for many years had been asked for by the railroad administrations and denied were almost immediately made effective. Restrictions were removed and competition abandoned. Freight and passenger 14 rates, much higher than ever allowed under private ownership, were allowed. Large increases in wages were granted to em- ployees. Immense sums of money were and are being spent in needed improvements. Lately the announcement was made that the national gov- ernment had consented to advance large sums of money to New England roads for rehabilitation, but unless our people are determined that it shall be apportioned not alone to im- prove local conditions, but to remedy, and provide the ter- minal and transfer facilities, lack of which is now operating to restrict the development of our business, the conditions necessary for growth of new business in this section will not be improved. Under the law by which the govermnent took over the rail- roads they must be turned back to their former owners twenty- one months after peace is declared. There are many con- servative people who do not believe that in the light of our world interests and dependence on railroad facilities there can ever be a return of the railroads to the laws of competition, dominated by private control. Railroads cannot in any case be returned to their former owners at the end of twenty-one months period if this carries with it a return to the restrictions, removed by the government when it assumed control. Railroad income must provide for repayment to the govern- ment of the additions to capitalization made under government auspices. Otherwise private investment will not, as before the war, be forthcoming for the expansion always needed. If the government control is continued, will it buy the rail- roads, or merely manage them, as it is now doing, guaranteeing a return on private investment? If the railroads are purchased, how are the owners to be compensated ? These are only a few of the questions which must be deter- mined within the next few months. Without attempting to theorize on any particular measure of relief there is a general agreement that a system of water transfer in Boston harbor, which for a number of years has been urgently recommended by the Boston Chamber of Commerce and other commercial bodies in Boston, is capable of being quickly and cheaply installed, should be established immediately. 15 The Union Freight Road, providing for land transfer via the Union Freight R. R. between the Boston & Maine and New- Haven, should be electrified and improved. With the new tracks over by Northern Avenue bridge should come a reas- onable revisal of ordinances now restricting its use. Dur- ing the month of January this year, a report to the Interstate Commerce Commission shows that seven hundred and forty- eight cars were "unduly held" by the New Haven and the Bos- Plan Showins Union Freight Emleqad andPdoposed connection with- NY7HH.% HDE-FdeightY^ds at So. Boston ovee Northern Ave Bpid6& ton & Maine railroads, because of inability of the Union Freight Line to receive them. As the goods transferred over this road are in the main of a perishable character, this meant a total of approximately twenty-five thousand tons of needed supplies unduly delayed. The increase in the costs of food-stuffs due to transfer delay and spoiling is an important factor in the cost of living. Some form of physical connection between the roads by an extension of the Grand Junction road to the New Haven 16 freight terminals should be worked out, and above all the practical co-operation of all our railroad facilities, the removal of all agreements restricting the free use of all our docks — the creation, under whatever control, of a real terminal which will make the port of Boston the real centre of New Eng- land's business. We have all the natural advantages, a fine harbor, twenty-four hours nearer to Europe, which means the advantage over our Atlantic port competitors of at least one round trip a year. The cost of unifying our terminals is small in comparison with the amount of benefit which would be received. The only thing needed is to awaken our people to the great importance of joining in the effort to bring about this result. 17 THE U. S. MERCHANT MARINE. The ability of the United States to trade freely in all the markets of the world depends on : — i. Financial strength. 3. A navy large enough to protect our interests. 3. An unfettered merchant marine. 4. A real awakening of national interest in a foreign market for our products. The war has transferred the financial supremacy of the world to the United States. Our navy has proved its worth during the war, and our people will insist that it be main- tained at adequate strength. The present position of the merchant marine, and the rea- son for its support, are treated briefly in the following: In 1855 the United States had an ocean-going fleet of about two and a half million tons, twice as large as it had when Europe went to war in 191 4. After the Civil War the nation lost its interest in foreign trade, and as year after year saw more and more restrictions placed by law on shipping, higher charges and no encouragement, our tonnage dwindled. Alien ships not only carried our goods overseas, buc their owners dictated freight charges, controlled American business and practically had it in their power to decide what ports in the United States could do business. Pools were able to dis- courage and defeat competition, and in short, an American merchant marine under pre-war conditions seemed hopeless. When the war came, it was soon apparent that if men and supplies were to be sent to Europe, ships and more ships must be had. Under the pressure of this emergency, we had to build ships, and now the task will be to utilize them in the nation's interest, to carry our goods to the markets of the world. Under the program of the United States Shipping Board, we have built or have under construction an aggregate fleet of 18 two thousand, six hundred and ninety-three ships of eleven million gross tons weight. At a liberal estimate these ships could be built before the war for seventy-five dollars a gross ton. Under war conditions and prices, it will cost the govern- ment for the war fleet probably two hundred dollars per ton.* Congress has already appropriated or authorized three billion, fifty-four million, three hundred and fifty-six thousand dol- lars, and further grants have been asked for by the Shipping 300 200 B U 3 100 O O M § O ■H f-t H •H a BALANCE OF TRADE AGAINST UNITED STATES IN TRADE WITH SOUTH AMERICA 19 10 1911 1912 1913 1914 1915 1916 IS Fiscal years ending June 30. 17 Trade Between United States and South America. Balance Year. Exports to S. A. Imports from S. A. of Trade. 1910 393,246,820 3196,164,786 #92,917,966 1911 108,894,894 182,632,750 73,737,856 1912 132,310,451 215,089,316 82,778,865 1913 146,147,993 217,734,629 71,586,636 1914 124,539,909 222,677,075 98,137,166 1915 99,323,957 261,489,563 162,165,606 1916 180,175,374 391,562,018 211,386,644 1917 259,559,458 542,212,820 282,653,362 Estimate Foreign Trade Council. 19 Board. In August, 191 7, there were sixty-one shipyards in the United States. There are now one hundred and fifty-five completed, thirty-five nearly completed and thirteen less than half completed. Three hundred and eighty-five thousand em- ployees are employed in these yards, with a weekly pay-roll of ten million dollars a week. The Shipping Board figures that from August, 1914, to Sep- tember, 1918, there was a loss due principally to submarines of fourteen million tons, and during this time the total new tonnage to meet this loss was ten million tons, or a net loss of four million tons. "The world will need, at least for a considerable period after the re- establishment of peace, the services of a tonnage even greater than that which existed prior to the war, and the merchant fleets now in being, even with the augmentation at present provided for by the construction programs of the United States and Great Britain, will be inadequate to the service they will be called upon to render. It now seems probable that it will require the continuation of the present accelerated program of construction for a considerable time after the war, in order to bring the world's ocean tonnage again to the point where it is adequate to meet the world's needs." "The United States will emerge from the war with a large merchant fleet and with the facilities for its renewal and expansion, but unless posi- tive steps are taken in the very near future toward the formulation and adoption of a sound national maritime policy, it may be set down as absolutely certain that these newly constructed American vessels will not remain in operation under the American flag and that the American mer- chant marine, rehabilitated with vast expenditure of capital and effort as a war emergency measure, will again be dissipated under the operation of inexorable economic laws. "For one thing is absolutely sure: Unless these vessels can be oper- ated profitably under the American flag, either they will be transferred to foreign registry, or they will rust out a useless existence which will soon terminate on the scrap heap. For production is fundamentally a question of profit, and production of ocean transportation, especially in foreign trade, where we must meet the competition of the world's ships, is not differentiated in its amenability to this economic law from the production of cotton or lumber or any other of the myriad articles of our daily com- merce."* Whatever decision is made by the government as to pur- chase, lease or control of land transportation will also apply to the tremendous ship tonnage built since the war by the Unit- Report Foreign Trade Council, Nov. 8, 19 18. 20 ed States. The excessive cost of these ships due to stress of war conditions and prices must be charged off as a war debt, so that the return on these ships may be computed on the same basis as any business investment. If the ships are to be owned by the government and privately operated this basis of fair charge must be determined, and likewise, if sold for private ownership and operation. 7 6 5 4 .3 to u _(H es.w Arir _ s.79 Ark _ _ .71 Cal 9.18 Colo 4.08 Dal Wwm^ Flo SnT r" . __ _ - _ _ .71 Oft 2.SB Idaho -- 5.71 111 ■INI . _ - _ .8$ Jnd 9 ._ _ _ _ .58 _ _ 0.00 Kims JJ _ _ .04 Ky _ 1.0S Lft Halms _ _ _ _ _ 2.80 m MASS _C 10.25 Eieh f^BBB 2.30 Minn 1.18 Kits 8.70 to . _ - 2.3.7 Hoot . __ _ _ _ _ 2.98 Rob j^p _ -___ - --- - . __ _ -- 0.00 SSKlSlB- !bOO iHr-««Cvl<\li-*fHi-!CM<\ii-«r-l>-tr4.-li-l,-t.-0ajM<- .-1 .-4 1 1 1 r I 12,000,000 1 1 r 11,000,000 - 10,000,000 > I / * 9,000,000 / / i / 8,000,000 / 7,000,000 6,000,000 5,000,000 4,000,000 ^ 1 5,000,000 i 1 1 / v m 2,000,000 LJ_J r* s / \ i / \ / \ 1 1 / s / \ / *>, / s / 1,000,000 I < < a 1 O < c 3> C < 5 c < n < i 1 < 3 ' <• » c « 3 l •i 5 5? t c ; 5 r> C 3 < ■> f 3£ * s 1 e 3 C 5 u a > C 1 c u u it 1 u 11 » !i I c > c > a 1 r > a IS > » « 5 O >-< 1 t- > > 1 « 1 r > O > ;3 l 0» 25 ita net debt of less than one dollar, New Jersey's and Pennsyl- vania's each amounting to only four one-hundredth s dollars. Although high taxes are a direct burden on the individual tax payer, they rest even more heavily upon manufacturers who find it difficult in normal times to compete with manufacturers of other states, where taxes and wages are lower and the laws relating to manufacturing more favorable and not so severe. High taxes retard industry, and business cannot prosper under unfavorable conditions. When public money is properly expended every citizen realizes that he should get more for taxes than for any other expenditure he makes. In Education, Good Roads, Health and Property Protection, the benefits from which are great, we have done more for our people than has been done in any other state. But we must insist that all the money paid out in the form of taxes, over which we have control, is econom- ically and efficiently expended, not only with a view to get- ting a hundred cents of value for every dollar spent, but to eliminate the expenditure of every dollar not vitally necessary to the proper operation of our local governments. In the days of reconstruction after this war, when the manu- facturers of Massachusetts will be in open competition not only with those of other states, but also with the world, it will be well for us if we go into the competition unimpeded by taxes greater than in competing states, and freed from the cost of govern- mental non-essentials which reduce our ability to compete. While by comparison with national standards our state tax is large, and as every additional item of expense which goes into cost of manufacturing is important in competition, we will need to keep down local and state taxes for another reason. The burden of war tax which we must meet is so huge that it almost passes comprehension. When one is fighting for his life the cost of the contest seems an unimportant detail. But it must be paid. We have been at war for about twenty months. This war will entail a total cost approximating two hundred billion dollars. Before the United States can close its war books, it will have spent, not including loans to the allied nations, twenty-five billion dollars. Our annual interest charge on our war debt will be more than the combined interest charges of all the European countries and their dependencies only 26 twelve years ago.* In one month of this year our war ex- penses and loans were greater than the entire cost to England of the Boer war.f Including our loans, the war cost to the United States will be greater than the total cost of adminis- tering the nation for the one' hundred and twenty-eight years ending June 30, 191 6. | Deducting all loans to the allies, twenty-five billions, or over twelve hundred dollars for each family in the United States, must later be paid off through taxation. The physical destruction by Germany of property on land and sea on the western front alone is estimated to be more than ten billion dollars, and about half as much more on the eastern front. The least money indemnity which can be imposed on Germany will mortgage its resources for many years to pay the bill for the physical property alone it has destroyed. There is no doubt but that Germany is to be an industrial competitor with the world after the war. It is believed that in the expectation of victory she has been producing certain * Indebtedness of Nations, with Amount of Interest Payments, Computed up to the Year 1906. Country National Debt Annual Interest Payments Austria-Hungary $1, 092, 863, 255 £48, 2 14,794 Belgium 621,640,286 24,925,694 Denmark 64,231,713 2,197.120 France 5.655,134,825 237,855,497 French Algiers 6,323,838 737.440 German Empire 855,963,454 3°,358,3°o German States 2,957,356,846 120,537,100 Netherlands 458,069,211 14,718,505 Portugal 864,701,627 21,369,000 Roumania 278,249,239 16,086,604 Russia 4,038,199,722 172,385,884 Russia, Finland 27,073,900 1,205,734 Switzerland 19,787,648 1,037,642 Turkey 458,603,213 9,499,45<> United Kingdom 3,839,620,745 150,295,210 British Colonies 612,510,084 22,802,418 Spain 1,899,265,995 69,256.706 Italy 2,767,911,940 190,803,281 Totals $26,517,504,541 $1, 134,296,179 f Cost of Boer War, one billion, one hundred and fifty-five million, nine hundred and four thousand dollars: Oct., 19 18, disbursement, one billion, five hundred and forty-two million, fifty-six thousand, six hundred and thirteen dollars. t Thirty-one billion eight hundred and eighty million, nine hun- dred and five thousand dollars. 27 articles in great quantities, with which, after peace, to flood the world, and thus draw into Germany gold which it greatly needs. Its industrial structure is thought to be almost as intact as that of the United States or England, and it can start if internal conditions permit at once producing for competition. The manufacturing districts of France and Belgium have been devastated, and it may take years before materials can be pro- duced, and the destroyed plants rebuilt. This lost time will be fatal, and it is suggested that one of th6 peace essentials, inasmuch as Germany cannot fully repay in cash, will be to compel her to furnish the labor to replace what she has des- troyed, and instal from German factories the needed machines, besides the employment for a given period at German expense of its laborers to restore destroyed agricultural sections to their pre-war conditions. This would not be punishment, but justice. Outstanding Liberty Bonds are about seventeen billions. No provision has been made for sinking funds to repay any of our various kinds of war indebtedness. Assuming that the allies repay their loans, or even the interest on them, the interest charges on our own war debt, with a small sinking fund al- lowance, will be greater than the total annual cost of con- ducting the nation's affairs before the war. Over what period will the payment of this war debt be ex- tended? To impose this entire burden in taxes on this coun- try during the next twenty years will mean heavy handicaps to business expansion. It will lessen our opportunities to com- pete in the world's markets. Taxation after the war must be kept below the point where it will injure cash resources or destroy the incentive to enterprise and ability. When taxa- tion becomes excessive it destroys the thing that produces it. Government expenditure cannot do the same good as the same amount spent in fair competitition by the individual. 28 AMERICANIZATION. The only spirit of reconstruction which can hope to succeed is recognition that the main contest is not so much with our competitors or rivals as with ourselves, our prejudices, and preconceptions of social, industrial and educational ideas. During the last twenty years Massachusetts has found that business regarded as peculiarly its own has gone from us. Competitive industrial invasion has proceeded on a scale of which only a few have realized. We cannot fight this con- dition as a united body, because we have within our state a large body of unassimilated aliens. Approximately one-third of the inhabitants of Massa- chusetts are of foreign birth; another third the children of foreign-born parents, and the other third the children of native-born. Of the six leading foreign populated cities in the United States, three are in Massachusetts, — Boston, Fall River and Lowell. The other three are New York, Chicago and Patterson, N. J. Three hundred and fifty thousand resi- dents of this state are unable to speak English, and over three hundred thousand males of voting age are not naturalized. Responsibility for the failure of these hundreds of thousands of alien residents to become true citizens, to learn respect for our laws, and loyalty to our institutions, is not wholly their fault, but largely ours. We have admitted them to our country, allowed them to remain apart from us, closed our eyes to the conditions under which they live, and have deemed them un- grateful because the standards about us which we hoped they would adopt when they first came to this country were apparently not adopted. Little or no attempt has been made by us to have them learn our language; we have been too indifferent or neglectful to disclose to them the advantages of citizenship and what it means, and too indifferent to care whether or not they became real participants in our national life. As a manufacturing state we depend largely on aliens to furnish our industrial working force, and if they have taken a 29 radical, and often anti-governmental position to our laws and customs, we must take at least a part of the blame. There never was a time since the civil war when we have been in a better position to approach the Americanization problem than to-day. As was shown by their reception of the news of victory, our alien residents seemed exalted with the fact that the United States has saved their native countries from ruin. Indifference or antipathy has been turned for the present into gratitude. Working on this we can proceed to remedy the results of our neglect in the past by instituting simple measures necessary to teach these aliens to become real Americans and real citizens; with knowledge of our language they will begin to realize what our country is, and what it stands for, and this will inspire them with the desire to become citizens. The true spirit of this country has been brought out by the war. The casualty lists have shown that at the front, on the same footing, with the same opportunities, and treated as an equal with other soldiers, they have done their part as well as the best. All we need to accomplish the same result in do- mestic life is to treat them at home exactly as we treated them as soldiers in the field. The first step in Americanization is knowledge of our lang- uage, and experience shows that this can best be accomplished through industry. This does not imply that this alien educa- tion will be under the control of employers, and the alien put in danger of being used for selfish purposes; but with the co- operation of employers it should be under control of the State Board of Education, and State Board of Immigration, with the active assistance of labor organizations. We must in the interest of the alien as well as of the state in the shortest time turn the present body of non-English speaking aliens in Massachusetts into one which can listen intelligently to the appeal to become more intimately united with the people with whom they live. Failing to do this we will have in the non-assimilated alien a constant obstacle to efficient reconstruction policies, especially those arising out of the transfer of workers from war to peace industries, and to changes in wage standards, inevitable during the next two years. 30 The administration of the industrial accident law has shown that less than one-quarter of the casualties of industry can be reduced by safeguarding machinery. Further reduction in industrial accidents depends largely on the education of the worker to be careful of himself. While the easily seen benefits in reducing unnecessary labor turnover, most of which is unprofitable to employer and workers, and industrial accidents, will undoubtedly more than pay for all the cost of alien education, the much more important result of that education will be the removal of the main cause of misunderstanding between the employer and wage earner. This will help to destroy the power of anarchist and the radical. With knowledge of English the alien will develop increased intelligence, efficiency and better earning capacity. In co-operation with Mr. Bernard J. Rothwell, Chairman of the State Board of Immigration, the Committee on War Effi- ciency, attempted in May of this year to obtain the exact situa- tion in regard to the foreign-born in Massachusetts industry. To this end a questionnaire was sent out, and under Mr. Roth- well's direction the results have just been tabulated. The in- quiry was confined to manufacturing industries employing more than fifty persons. The state was divided into twelve prin- cipal industrial districts. Statistics as to native and foreign- born employees, details as to the sources of nativity, with ability to speak English or not, were obtained for six hundred and forty-seven thousand and five employees, or a little more than one-third of all the persons employed in this Com- monwealth. This inquiry shows that of this number of employees there were four hundred and forty-three thousand, five hundred and sixty-three men, two hundred and thirteen thousand, four hundred and forty-two women; and a total of two hundred and ninety-nine thousand, eight hundred and sixty-one foreign- born, or forty-six per cent. Of the foreign-born, thirty-eight thousand, one hundred and sixty could not speak any English whatever; sixty-five thousand, seven hundred and seven could understand English slightly and one hundred and ninety-five thousand seven hundred and seven could speak English more or less readily. The important fact is, that one hundred and three thousand, eight hundred and sixty-seven of the wage- 31 earners employed in manufacturing industries employing more than fifty persons in this state have little or no knowledge of English. This study explains why we have in Massachusetts two hundred and fifteen thousand persons, ten years and over, who cannot read or write in English and one hundred and eighteen thousand ten years and over who cannot read or write in any language.* CONCRETE AMERICANIZATION PROGRAM.f I. STIMULATION OF NATURALIZATION. 1. Pass a law requiring registration of all non-citizens with city or town clerk. 2. Have state district the cities and towns whose aliens are too nu- merous to be handled by one board. Director of naturalization activity (unpaid) to be appointed by Governor, Mayor or Selectmen for each district, city or town. 3. Each local director should organize a corps of workers recruited from Chambers of Commerce (in Boston the Chamber of Commerce is already prepared to offer over three thousand active workers) Boards of Trade, civic, social and labor organizations. All should receive instruction in the attitude and purpose of the state in this work to enable them to explain to aliens why the Commonwealth is undertaking this work, educating them as to the privileges and duties of citizenship. Compulsory natural- ization is not to be encouraged, and must be guarded against. 4. District workers should help each individual alien non-citizen to the next step in his program leading to naturalization, whether it be filing first papers, making most convenient arrangements for the acqui- sition of English, receiving instruction in the civics necessary to pass the court examination, or preparing for final papers. 5. They should report regularly to the district director whose duty it will be to supervise the efficient following-up of all cases. 6. The district director should forward to the State Board of Immi- gration the names of all aliens who refuse to take any steps toward natural- ization. 7. The State Bureau of Immigration should keep these names ac- curately, recommending annually to the legislature such progress as has been made in Americanization of our alien residents, and the pre- paration of a plan which will put such residents who persist in remaining aliens in an unfavorable position as to employment, civic privileges, etc. * Reference, J. H. Moyle, Director Dept. of University Extension, f Suggested by Edward V. Hickey, Former Secretary to State Bureau of Immigration. 32 It enables us to understand why the anti-government agi- tator can recruit a following. It indicates a mass of people to whom our policies and ambitions are a closed book. To allow such a condition to continue, especially with the after- the-war needs immediately ahead of us, is an act of folly. As an industrial state we cannot hope to succeed well in the coming contest for home and foreign trade with a third of our industrial workers unable to speak with us. While not dis- couraging in them love for the lands of their birth, it is our duty to encourage in them a loyal spirit to the land of their adoption. II. CAMPAIGN TO TEACH ALL FOREIGNERS ENGLISH. i. Preparation by the State Board of Education of uniform courses in simplified English under direct-concept method, which has been demon- strated can teach the average foreign resident of Massachusetts to speak common English readily after forty -five one-hour lessons. 2. Preparation by the State Board of Education of teachers in every city and town fitting them to teach under this simplified method. 3. Statutory requirement that all foreign-born between eighteen and forty-five years of age, if unable to speak English readily, shall enroll and complete this course in the city or town in which they live. 4. Establishment of classes in English under the supervision of the various local directors of naturalization in day schools, evening schools, and especially in manufacturing establishments, in co-operation with local school authorities and groups of manufacturers. 5. Supervision of this instruction in English to foreign-born to be under the State Board of Education. III. INSTRUCTION IN LAWS, CUSTOMS, AND SPIRIT OF AMERICA. 1. Comprehensive series of lectures in foreign languages as well as in English, under the direction of the State Board of Immigration, ac- companied by moving pictures, covering the history, government, economic and social development of the country, its laws, the duties and privileges of citizenship, etc. 2. Weekly (at least) lectures in all classes (which may be combined for the purpose) in which English is being taught, covering this same ground. 3. Preparation and insertion of articles covering these topics in the foreign language press, by authority of the state, under the direction of the State Bureau of Immigration. 33 LABOR. In November, 191 7, at the request of the Massachusetts Committee on Public Safety, I was appointed Chairman of the Committee on War Efficiency,* which, under the then plan of the Council of National Defence, was created to rep- resent the government in the formation of the national war labor program. Due to a discussion as to the source of author- ity at Washington, finally determined by placing it under the U. S. Department of Labor, my appointment as Director for Massachusetts of the U. S. Public Service Reserve and the U.S. Employment Service was not made until three months later. Preparation by the Committee on War Efficiency for the work ahead was continuous, and it was soon apparent that any plan devised to transfer workers from non-essential work of peace to essential war industries would be of much greater value if designed from the beginning also to be utilized for transferring them back to peace uses after the war. In many things the war forced us to think of subjects that had hitherto been disregarded. Skilled and unskilled labor became the scarcest commodity in the world. To stretch the available supply out to keep the war going and people at home supplied, forced recognition that inferior housing, with its result on the health and physical condition of the poor, was bad enough in peace, but when the nation wanted most effi- cient labor it could not expect to secure this by additional crowding in unsanitary areas. In like manner it was apparent that the presence in this state of many thousands of aliens, who, unable to be in- structed in their work or to take orders in English from their foremen, were thus at a time when we needed the greatest individual output, less efficient as producers.' They were the prey of enemy agitators, a cause of constant worry to the authorities. An Americanization program was therefore necessary. Equally important were programs for "Education," "Women •Mass. Committee on Public Safety, Henry B. Endicott, Executive Manager. Committee on War Efficiency : William A. Gaston, Chairman; Mrs. Nathaniel Thayer. William M. Butler. B. Preston Clark, W. M. Crane, Henry I. Harriman, Robert F. Herrick, Martin T. Joyce, James Logan, Arthur Lyman, Walter L. McMenimen, Joseph B. Russell. John F. Stevens. Edw. F. McSweeney, Executive Secretary; Mrs. Agnes E. McNamara (loaned by Civic Federation) Assistant to Secretary, 34 War Workers," "The Repair and Rehabilitation of the Injured in War, and also in Industry," "Statistics on Man Power," not only for during the war, but after it. The Committee on War Efficiency was able to enlist in its service for study and report on these topics, groups of experts for war service freely and patriotically performed to each of whom I wish most gratefully to express the personal obligation I am under for the work they did.* While this planning for war work and reconstruction was proceeding under the direction of these advisory committees, local agents of the U. S. Public Service Reserve in March, registered twenty-nine thousand mechanics who volunteered for shipyard work on call. Thousands of persons for special ♦ADVISORY COMMITTEES. COMMITTEE ON WAR EFFICIENCY. William A. Gaston, Chairman. Labor Employment Agencies Mr. Charles F. Gettemy, Chairman, Direc- tor Bureau of Statistics. Women in Industry Mrs. Wm. A. Troy, Chairman. Mrs. Nathaniel Thayer, Woman's Committee, Mass. Div. Council of National Defense. Aliens in Industry Prof. Geo. Grafton Wilson, Harvard University. Mr. Bernard J. Rothwell, Chairman, State Commission on Immigra- tion. Mr. Geo. W. Tupper, Sec. Y. M. C. A. Housing and Transportation Mr. Robert A. Woods, Chairman. Mr. T. E. Donovan, Mr. Henry Sterling, Sec. Homestead Commission, Mr. R. Clipston Sturgis, Architect. Capital Expenditure Hon. Josiah Quincy, Chairman. Dr. F. A. Cleveland, Mr. Theodore Waddell, State Bureau of Statistics. Training in Industry Mr. F. V. Thompson, Supt. Boston Schools, Deputy Commissioner of Education R. 0. Small, Dean Everett W. Lord, College of Business Administration, B. U. Health in Industry Dr. E. R. Kelly, Chairman, Commissioner of Health. Dr. F. D. Donoghue, Medical Advisor, Industrial Accident Board. Dr. M. V. Safford, Hon. Edwin Mulready, Commissioner of Labor. Idle and Casual Labor Mr. Benj. C. Weakley, Chairman. Rev. Michael J. Scanlon, Mr. Franklin P. Daley. Industrial Man Power Survey Dr. Donald B. Armstrong, Chairman. Mr. Robert N. Turner, Mr. Percy Broderick, Industrial Accident Board. Publicity Mr. T. J. Prather, Chairman. Mr. John Morgan, Mr. John F. O'Connell, United Shoe Machinery Co. 35 war purposes of the government were recruited, and a plan of co-operation between employers and wage earners for the trans- fer from non-essential to essential war industries was devised. In July, 1018, a State Advisory Board, consisting of equal representatives of management and labor organizations was appointed to assist the Director,* and about two score Labor Community Boards, each having full charge of the labor pro- gram in their separate localities, were created. In August, 1918, I resigned my position, the vacancy being filled by the selection of Dean Everett W. Lord of the College of Business Administration of Boston University. An able man, who for years has been devoting himself to educational work to meet the needs of modern enterprise, Dean Lord and his associates on the Advisory Board can be trusted to do everything possible to carry out the labor program for Massa- chusetts in an efficient manner. It should also be said that the support given me by labor organizations and manufacturers was most cordial and satis- factory. Both were willing to bury past differences in their earnest desire to make the program a success. It was intended originally that the concentration of labor activities for war purposes should be under the direction of a division of the Council of National Defence, putting the extraordinary measures for mobilization of labor for war work on the same basis as the Food and Fuel Administra- tions, with authority for war exigencies, which could when the emergency war need ceased close out their offices, leav- ing Congress to provide for continuing such part of their program as was necessary for the reconstruction period. The final placing of this authority in the U. S. Department of Labor delayed consideration of all plans, and it was not until midsummer that a semblance of order began to emerge out of the chaos of administrative details deemed necessary to get the new department started. The national labor pro- * State Advisory Board: William A. Gaston, Chairman. Alfred A. Glidden, Management. Albert R. White, Management. Martin T. Joyce, Labor. William A. Nealy, Labor. 36 gram, therefore, has been organized but a comparatively few months, and the war has ceased before the intricate organiza- tion designed for war purposes has been placed on a working basis. Its whole energy, if continued, must be reversed for peace purposes. At the present moment, with war at an end, a theoreti- cally united control of employment service has been created. Employers of labor have loyally, but in many cases unwillingly, accepted the decisions of the department because they would not take an attitude of opposing any government order issued for the purpose of winning the war. The labor organizations have been co-operative, but in the multiplicity of conflicting authorities, one having charge of labor recruitment and place- ment, another of wages, another of labor conditions, another of priorities, employer and employee have been confused, and cannot reasonably be expected to embrace in peace times sumptuary regulations and administrative policies in which they do not believe, or in which, in the light of experience, they cannot honestly find any hope of advantage or permanent usefulness to the nation. Any undertaking of this magnitude under stress of war emer- gency is certain to show a percentage of waste which cannot be justified by the results achieved. The U. S. Department of Labor will find it difficult to demonstrate that it is possible to utilize the machinery, built up by it for the control of war needs, to restore this war labor to peace industry, and also to provide for the important problems of unemployment before us. It is also a practical impossibility to enforce the general rules which must be made from Washington for different sec- tions, with different labor and industrial needs. A national control of labor employment in all its aspects can hope to succeed only by adopting the most general policy and permitting each state to work out its own detailed prob- lems. The official in charge at Washington may be perfectly sincere when he plans for a labor program based on the needs of the agricultural or fruit or mining regions of the far west, where conditions are known to him, but the general orders issued on this basis are doomed in advance to be worthless when applied to the highly specialized shoe, cotton, and other industries of Massachusetts, or to the steel industries of 37 Pennsylvania. The difference in wages, labor conditions and labor laws in the various parts of the country only increases the difficulty. A concrete example of this was shown last spring. Notice came from Washington to prepare to secure enrollments for volunteer vacation farm labor. A volunteer organization that had shown extreme efficiency in the shipbuilding drive in Massachusetts was made ready. About April 15, 1918, letters and telegrams were sent to Washington, appealing for the forms, circulars and general publicity. No reply being re- ceived, work was instituted independently. About the middle of May it developed that in the west the only farm labor need was in midsummer for the harvest: the department being ap- parently unaware that the farmer in Massachusetts needed his help most of all during the planting period beginning in May or before. The Department of Labor, created to enforce labor laws, was never intended, in my opinion, to be expanded to the con- trol of industry in peace times such as was justified by the extreme emergency of war needs. The importance of the issues at stake, and the need of strengthening the permanency of our industrial structure should force the nation to consider and decide without delay on the widsom of continuing as a peace measure this strictly war machine, and this decision should not be made without the most careful thought being given to its effect upon the industrial interests of each of the states. One result of the creation of the U. S. Employment Service was the establishment theoretically and, to a certain extent, actually, of a government monopoly of the labor market, incidental to which many private employment agencies operat- ing on a commerical basis by making a business of furnishing employers with help through the exaction of fees have been driven out of business. Some of these agencies, particularly those working among aliens had been guilty of practises, which have left them without friends to mourn their death; others, conducted on a better standard and free from the grosser abuses of the business, suffered likewise. There are great possibilities to industry, in a system of public labor exchanges, which through the operation of a central clearing house arrangement will reduce, turnover and 38 stabilize labor to the advantage of employee and employer. Nothing is so conducive to good order as the general employ- ment of the people, and bringing together of employers in need of help and of individuals needing employment is, very likely, to be increasingly recognized as a public function. For many years public employment offices have been main- tained in various states, usually supported entirely from the state treasury; but, in some cases, managed by munici- palities. Massachusetts 12 years ago organized free em- ployment offices situated in Boston, Worcester and Springfield. Under the pressure of war emergency, these offices in Massa- chusetts were capable, in my opinion, of expansion along lines of much greater usefulness to our large industrial interests and wage earners generally, by establishing additional offices at strategic industrial centers, and also developing their func- tions along more intensive lines. The needs of the war and with employment itself primarily a war question made it unwise after the decision of the U. S. Labor Dept. office to under- take general control over employment and expansion of the public employment office system in Massachusetts. The co-operation of the state offices was most cordial and efficient, but now that demobilization has begun, the necessity for main- taining a federal employment service in states which have established a similar service must be decided. Those con- cerned with the industrial welfare of the Commonwealth should arrive at a definite decision whether their interests will best be served by a State agency immediately responsible and responsive to them as taxpayers supporting it, or by an organi- zation whose headquarters and seat of final authority is in a bureau of the federal government at Washington. Forty per cent of the seven hundred and eight thousand, four hundred and twenty-one persons in manufacturing in- dustries in Massachusetts in 191 8, are estimated to have been engaged in war work.* At the very minimum, five hundred thousand persons in this state were transferred from normal industry to war and war industry. The transfer of labor under demobilization in manufacturing and mercantile industries will be a slowing down process. Workers will grad- * Director of Statistics, State House. 39 ually be employed on peace products. Enlisted men expect as a rule to return to the places they held before the war, displacing those filling their jobs, so, as far as they are con- cerned, the unemployment problem will not be changed. A large number of persons who in normal times were without occupation and unskilled, the unemployed, the half employed, many on the verge of being workless, have found war em- ployment at high wages, but cannot hope to hold their places under the pressure of capable and efficient competition of the now released workers seeking employment. Women for whom the minimum wage was formerly urged, employed at small wages, or in domestic service, who have found in munition factories vastly greater wages than skilled male workmen received before the war, will find under the new conditions not only their occupation gone, but difficulty in getting their old work at all, even at greatly reduced wages. While the situation is not yet acute, it is ahead of us. The day after the armistice was signed it was found that the em- ployment situation had been changed over night. The pres- sure of employers to get help was removed. There is and will be for a long time a demand of workers to get employment. On December fourth, the War Department announced that it had cancelled war contracts aggregating two billion, six hundred million dollars. The recent announcement that the War Department will withhold cancellations of war contracts until after state Federal directors and community labor boards have opportunity to obtain information as to the industrial conditions in the localities concerned will, if carried out, be of great help in retarding an unemployment crisis. The painful feature of this question is that wage savings have not been the rule among war workers. Longing all their lives for luxuries which they always hoped to be able to obtain, they refused to consider the possibility of the high wages ever coming to an end. They have created for themselves new wants and a higher standard of living. They will resist re- turning to reduced wages, and it is among this class that the radical, seeking to destroy good government, will find fields for the spread of destructive teachings. The press announcement by some labor leaders that any re- duction of wages will be followed by industrial war was, if true, 40 as unwise as the expectation that wages will be shortly forced down to the plane before the war. During the war many wage earners have received increases in wages which more than compensated for the increased cost of living. To this class the war did not in any sense represent sacrifice, but the contrary. A large class of workers received increased wages, which in part compensated for the advanced cost of living, and to the amount of this difference they are worse off with their advanced wages than they were in 1014. To clerks and salaried officials, and to an extent the professional classes, increases in incomes, if any, were altogether dispro- portionate to the increased cost of living. The purchasing power of each dollar received by them is approximately three- quarters of what it was only four years ago. This class, and it is a large one, has suffered severely. Rearrangement of wage schedules after the war must there- fore depend in large measure upon the factor of the cost of living. The value of the wage received by the wage earner depends on what he can purchase for each dollar. Any atti- tude by wage earners that war wages are inflexible, and not sub- ject to any change, or on the part of employers that wages must be reduced without regard to the cost of living and the main- tenance of living standards, is only an invitation to trouble. The nation has a right to ask that in the competition for increased foreign trade, the unions in their own interest will resist any artificial restriction on the energy and output of their members, and especially to resist any attempt to sub- stitute trade union control as a wedge between its members and the state, thus to become the source of authority and unit of industrial control. In the long run this would be destruc- tive of union prestige. Unemployment has never been absent in the United States. In recent years we have had panics, in 1893, 1907-8, and in 19 1 4 and 191 5. It is not anticipated that our employment problem will be acute until next year, after which, unless averted by prompt and wise action, it may continue for some time at least thereafter. If this theory is correct we have time to increase our opportunities for employment by pro- viding better facilities for freer intercourse in the home market, and by stimulating use of our ports as outlets for foreign trade, 41 to keep our workers profitably employed and these problems are perhaps more important to the worker than to any other class in the community. After the civil war the period of depression which set in in 1866 was short-lived. The industrial expansion which began in 1867 was helped by the opportunities and develop- ment of our western territory. The great tracts of unsettled land then available do not exist to-day, but there are still wonderful opportunities in the United States for developing our agricultural production. We hope that many soldiers for- merly employed in factories will, after their life in the open, seek out-door employment on farms and otherwise. This will undoubtedly be encouraged by the government which must keep its three million enlisted men from demoralizing indus- try by keeping its armed forces under military control until they can safely be absorbed. In addition the government is to-day employing millions of men on railroads and in other occupations. It can regulate industries, inaugurate new business, and can expend billions of dollars on railroad im- provement, rolling stock, double tracking, electrification, building highways, housing and irrigation. Compared to the difficulties of readjusting the civilian war workers, the danger from the enlisted men is negligible. 48 The foregoing chapters have been devoted to some of the local problems on which we can begin to work, because, while fun- damental, they are wholly under our control. The great questions to be settled are not alone the lines of territorial changes; and the freedom of subject peoples, which have in the past been the main object and purpose of war, but the foundation must be laid for a new system of civilization, accept- ing the fact that unfair trade competition is as much to be feared as a disturbing element as war. Provision for regu- lating trade and commerce must not be confined to the elimi- nation of tariff hostility and discrimination, but secure to each country the advantage of the education, training and special advantages given its people and the right to a complete develop ment of its resources. Fifty years ago the people of the United States were not affected by a famine in China, but to-day if a million persons are starving in India it increases the pressure on the people of the whole world. We are all vitally interested in the question of after the war feeding of the world. Our surplus of food stuffs, raw materials and necessities, must be apportioned according to actual needs, before the exportation of luxuries in any form, under strictest regulation, to avoid international as well as home profiteering. Done wisely this will stimulate production in these foreign countries; it will reduce the cost of living, and, of more importance, it may also favorably answer the question as to whether there is too much labor power in the world, and with this solve the problem of unemployment and its attendant evils. The leading banks of the United States which have for many years been making preparations for providing facilities for trade in South America are vitally interested in these larger questions of world trade because of the tremendous demand for vast sums which will be needed for rehabilitation in Europe. Preparation must at once be made for the forms of security required for the purchase of material, machinery and equip- ment necessary to build up the war devastated areas in France and Belgium and through to the far East. This work, if carefully planned, and well carried out, can keep the workers of the United States occupied profitably while the readjustment from war is going on. Banks and investors in this country 43 must prepare to absorb securities properly and wisely issued necessary to provide these credits. To keep and improve our trade with South America, Africa and the Orient, greatly increased under the circumstances of war, we must invest money largely in those countries. South America needs money not only for the development of its industries, but also to develop municipal undertakings, water power, and railroads. In Boston we have the opportunity to receive raw materials from all over the world, and by the exercise of good business ability and with the joint effort of labor and capital, to turn them into New England products which will keep our citizens employed. The question of the nationalization of our railways is a vastly different one than national control of the rest of our industries. Neither in England nor in France, or even in Germany, has the experiences resulting from state control of operation of industry, been encouraging. To imagine that we can maintain the industrial supremacy of the United States in times of peace against the competition of the world, under a system of general state control of industry, must be futile. In any case, the solution of these important problems cannot be left to chance. If we drift along and permit these questions to be decided as they present themselves for action, hap- hazardly or by the accident of political power, they are certain to develop internal difficulties, imperil our industrial future, increase the problems of capital and labor, and in general, make more difficult our problems of government. 44 LlttKHKY Ul- LUWUKtiO 006 049 174 4