to take their pleasure in such a way, they might go on indefinitely without the aggregate of employment of capital or labor being affected. If they continued this impolicy for a twelve month, we should say that whereas in the first year they saved useless mills, in the second they saved useless cotton goods. In neither the first nor the second year is there any net increase or decrease of employment due to the new policy of saving. In fact, assuming sanity of individual conduct, affairs would work out differently. Admitting an attempt to work the surplus mills, the actual over-production of goods could not proceed far. Let us assume savers to use, throughout, the agency of banks, which are to find investment for their savings. Suppose the banks, not realizing the mode of this new saving, have invested the first year's savings in superfluous cotton mills. These cotton mills or others in the next year cannot continue to work without advances from banks, since they are unable to effect profitable sales. Soon after the beginning of the second year the banks refuse to make further efforts for over-production; markets being congested and prices falling, the demand for bank accommodation will grow, but banks will not be justified in making advances. Now the weaker mills must stop work, general short time follows, and the result is unemployment of labor and forms of capital. This is the first effect of the attempt to over-save upon employment. We have now for the first time a reduction of the aggregate of production. The result of reduced employment (under-production) will be a reduction of real incomes. This will tend to proceed until the reduced reward of saving (real interest) gradually restores the right proportion of saving to spending-a very slow and wasteful cure.

It thus appears that so long as saving can be vested in new forms of capital, whether these are socially useful or not, no net reduction of employment is caused, the portion of income which is saved employs as much labor as, though not more than, that which is spent, but when the machinery of production is so glutted that attempted saving takes shape in the massing of loanable capital unable to find investment, the net production and the net employment of labor in the community is smaller than it would have been had saving been confined to the minimum required by the needs of the society.

From the standpoint of employment the injury done by over-saving is thus seen to consist not in the over-production of plant or goods, but in the condition of under-produc

tion which follows the financial recognition of this glut. The real waste of power of capital and labor is measured by the period and the intensity of the under-production in which forms of capital and labor stand idle.

Over-production induced by over-saving is, of course, most widespread, as it is most striking, during an industrial crisis. But it may exist to a more limited extent during periods that are regarded as substantially normal. There may be an excess of productive instruments in the greater number, or even in all, of the industries of a country at all times except those, of extraordinary prosperity. Something very like this seems to have become true of the United States. Between 1886 and 1895 the average product of more than two thousand manufacturing establishments in Massachusetts was only 50 to 70 per cent of their full capacity. It has been estimated that with their existing equipment of capital and labor, the shoe factories of the country could meet the current annual consumption by running steadily for four months In the absence of larger statistics, no precise estimate of the extent of the phenomenon can be attempted, but if every-day observation may be relied upon, the amount of productive power that is unused is enormous. At every turn we seem to see efficient machinery abandoned or running on short time, and the cause is almost never a scarcity of labor. Now if the idle or partially idle capital instruments were the worst of their kind, and if the new machinery invariably and immediately crowded out all the poorer instruments that were not needed to supply the current rate of consumption, the excessive accumulation of capital would cause neither over-production of goods nor diminution of employment. The savings that might have been exchanged for consumption goods would have been expended in making machines that were allowed to perish as fast as new machines adequate to the current demand were put in operation. Thus labor would be kept employed and excessive production restricted. But the industrial mechanism does not work so smoothly. The owners of the older instruments of production. are not doing business on this lofty plane of philantrophy. They continue to produce, and to compete for a share in a market that is beginning to be over supplied. The directors of production see prices, and therefore profits, declining, and endeavor to recoup by lowering wages. Profits, however, continue to diminish, until some of the industries are closed, others are

running only a part of the time, unemployment has increased, and wages are further reduced.

This theory is at variance, obviously, with one of the commonplaces of the older political economy. We have been assured very frequently that general over-production is an. absurdity, since a supply of goods always means a demand for goods, and since the wants of men are never fully satisfied. Undoubtedly the existence of goods implies the power to purchase other goods, and the existence of unsatisfied wants means a desire to purchase; but what Adam Smith called "effective demand," the only kind of demand that will take the surplus goods off the market, requires that the purchasing power and the desire exist in the same persons. As things are, those who can consume more have not the desire, and those who have the desire have not the power. And there is assuredly nothing in the nature of our industrial mechanism to prevent this condition, which is obviously possible in one or two lines of production, from being realized in all. This failure of production and consumption to function harmoniously in the economic organism seems to have escaped the notice of so able a writer as Professor Clark, when he wrote: "The richer the world is in capital, the richer the worker is in productive power." Richer in productive power, yes; but what if the condition of consumption, the actual demand for products, does not call for the full exercise of this power? The very excess of productive power relatively to the needs that are combined with purchasing power, means an excess of supply of labor, which in turn means unemployment and low wages.

The three forces of combination, rapid introduction of new forms of machinery, and excessive multiplication of existing forms, seem likely to continue operative for a long time to come. In a general way they are mutually helpful in their detrimental effects on labor. The powerful and highly organized industrial combinations are able to put in new forms of machinery on a more extended scale than would be possible in a régime of small industries. It is true that these combinations will check over-supply of capital in the fields in which they are supreme, but in so doing they limit the opportunities for the investment of new capital. Outside of the province. dominated by the great industries, therefore, the danger of a too abundant supply of capital instruments is increased; it has gained in intension what it has lost in extension.

To sum up, sufficient data have been presented to justify the conclusion that the proportion of adult male wage earners (outside of agriculture, where the remuneration is much lower, but the cost of living not so high) obtaining less than $6co per year, is at least 60 per cent. This is a fact fully as disquieting as Mr. Robert Hunter's estimate that, "not less than 10,000,000 persons in the United States are in poverty"; that is, "they may be able to get a bare sustenance, but they are not able to obtain those necessaries which will permit them to maintain a state of physical efficiency." Of course, the requisites of physical efficiency as a worker are much less than the requisites of a decent livelihood for the head of a family; consequently Mr. Hunter's estimate is not equivalent to the statement that only two million male adults (on the assumption that these form one-fifth of the total number of persons below the poverty line) fail to get a family living wage. Explaining further what he means by physical efficiency, Mr. Hunter says: "No one will fail to realize how low such a standard is. It does not necessarily include any of the intellectual, æsthetic, moral, or social necessities; it is a purely physical standard, dividing those in poverty from those who may be said to be out of it." If there are two million men in this country beneath even this materialistic level, it is not at all improbable that 60 per cent of the men wage-earners among the twelve and one-half million men engaged in general occupations other than agricultural and professional, are getting less than $600 annually. As to the prospects of the underpaid, wages have increased less rapidly during the last quarter of a century-the period of our greatest industrial improvements— than during the previous thirty years. Whence the inference seems valid, that side by side with the progress of production there have existed forces which have prevented the laborer from obtaining his full share of the results of that progress. Three of these forces, namely, monopolistic combinations, rapid displacement of labor by machinery, and excessive multiplication of the instruments of production, will in all probability be with us for many years yet, increasing the rate of unemployment, and restricting the upward movement of wages. From these evils the poorest paid, being the least able to resist a reduction or to utilize the possibilities of a rise in their remuneration, will naturally be the greatest sufferers.

MISS FERRILL'S DIPLOMA.

BY JEANIE DRAKE.

HEN a man is the fortunate exception to an ancient proverb, some exaltation of spirit is inevitable. But even the rare prophet honored in his own country should wear his laurels meekly. If in shining inexperience he solemnly trifles with the wise saws and modern instances respectfully permitted to venerable and prosy age, he is apt to come to grief. At least, this is what happened to Mr. Winthrop Hadden in an hour of anticipated triumph.

Though not yet thirty, he had done his native town good service as representative, for which, when he returned to pursue a successful law practice, it elected him mayor. Even in a very small place this is a responsible office; but it may be that he took it too seriously, and was over conscientious or conscious of his dignity. Older men said with indulgence: "It will wear off, and meanwhile he does good work." Younger intimates made light remarks about the size of his head; and Miss Olivia Ferrill told him that she "was not the least afraid of him even if he was Lord High Executioner, or something of the sort." Also "that she preferred him when he was more amusing." In spite of which he continued rightfully to regard this young lady as the fairest flower in his life path, she being very pretty, very bright, very charming, and his promised wife. She was about to be graduated with distinction from the Boxbury High School, and with sedate satisfaction and grave delight the Mayor, Mr. Winthrop Hadden, in fine Himself, had accepted an invitation to officiate at this function. He was to present the diplomas and incidentally to make a speech-a continuous speech, if he chose, the audience being quite at his mercy, as is customary at these affairs.

There was fluttering and there was whispering in the graceful group of white-robed girls when he came upon the stage on the appointed evening.

"He is certainly handsome," murmured one fair creature. "Especially in evening dress," supplemented her friend.