Manufactures. In agriculture, however, the passage of time has not brought about a highly capitalized form of industry, the typical farm represents only a relatively small investment and is tilled by its owner, there is no sharp distinction between employees, unions of wage earners are practically unknown, and passage from the wage-earning to the employing class is still common. In manufactures, practically all these conditions have been reversed since the end of the eighteenth century. And it is the tone of the manufacturing industry rather than that of agriculture which represents the keynote of the modern economic movement, because agriculture is constantly decreasing while manufacturing and allied industries are constantly increasing in relative importance. At the beginning of the last decade of the eighteenth century, seven eighths of the working population were employed in agriculture, and the manufactured products of the country were valued at $20,000,000. Half a century later, in 1840, 77.5 per cent were employed in agriculture, 16.5 per cent in trades and manufactures alone, and the products of the manufacturing industries were valued at $483,000,000. Fifty years later, in 1890, 35.7 per cent were in agriculture, 24.4 per cent in manufacturing and mechanical pursuits, and the manufactured products were valued at $9,370,000,000. In 1909, to cite the latest figures, 32.9 per cent were in agriculture and 28.3 per cent in manufacturing and mechanical pursuits, while the value of the products had reached the enormous sum of $20,700,000,000.

The change in the character of the industry has been even more striking than its growth and expansion. In the first place, machinery and capital have become increasingly prominent. In 1850, for instance, $556 worth of capital was invested for each wage earner, while in 1909 the average amount of capital per wage earner was $2785.1 In the second place, the organization of the industry has changed, so that the individual owner and ordinary partnership are rapidly being replaced by

1 Owing to variations in the definition of "capital" and other similar changes, the statistical comparisons made in this and the preceding paragraph are not accurate, and are to be accepted as illustrations rather than measurements.

the corporation. At the beginning of the nineteenth century, corporations, though not unknown in commerce and banking, were very uncommon in the manufacturing industries. In 1909, incorporated companies employed 75.6 per cent of the wage earners and manufactured 79 per cent of the goods produced in all the manufacturing industries.

This change in organization has been a powerful factor in destroying the personal relation between the owners of capital and the wage earners who man their plants, and has thus helped to widen the growing breach between capital and labor. It has also contributed greatly to the concentration of industrial control. Law and custom in this country have combined to make the small stockholder in the largest corporations a virtual nonentity so far as practical participation in the management of the corporation is concerned; and the individual or clique of "insiders" who own a bare majority of the stock too frequently rule the business despotically. Incorporation, then, instead of introducing a greater measure of real industrial cooperation and thus democratizing industry, has too often turned out to be an ingenious device by which energetic promoters borrow or secure the spare savings of the community on the most flexible terms and with a minimum of responsibility. The corporation thus, while it appeared to be diffusing the ownership of industry, has in reality worked toward the concentration of industrial control.

Other forces, moreover, have been working toward industrial concentration, the most powerful of which, perhaps, has been competition itself. For many decades in this country the competition among rival manufacturers was bitter and practically unrestricted. Tied down to their large investments of fixed capital, they were compelled to stand and fight without quarter. In every such war the number of combatants tends to decrease. As old rivals are killed off, the successful acquire greater skill and greater power in the conflict. With the passage of time greater and greater equipment is required to give any hope of a successful struggle, and some of the contestants, learning prudence from the struggle, combine to increase

their fighting power. The inevitable result, whether through simple survival of the fittest or through combination, is a marked increase in the size and importance of the industrial unit. Between 1899 and 1909, for instance, the number of establishments in the factory industries increased only 29.4 per cent, but their capital increased 105.3 per cent, and the value of their products 81.2 per cent. In many of our most important industries the number of establishments is actually decreasing. In the manufacture of agricultural implements between 1880 and 1909, to take a single illustration of the many that might be cited, the number of establishments decreased from 1943 to 640, while the wage earners increased from 39,580 to 50,551, and the value of the products from $68,640,000 to $146,330,000.

There are industries, of course, in which no such consolidation has taken place, but they are unimportant in comparison with those in which it has. The extent to which the giant industry and large-scale production had come to dominate our manufacturing industries in the year 1909 is shown in the following table, which will repay careful study. Establishments of the largest size, i.e. those whose annual output exceeded $1,000,ooo, constituted a little over 1 per cent of the number of establishments, but manufactured nearly 44 per cent of all the goods. Nearly three fourths of the wage earners were employed in establishments having a capital of more than $100,000 each.

In the latter part of the nineteenth century the movement toward large-scale industry took on another phase. In addition to concentration or centralization of industry, we are now having a rapidly increasing integration of industry. Large business concerns are finding it profitable to carry on under one management several closely related industries. For illustration, take the case of the United States Steel Corporation. Here we have united under one management the American Bridge Company, the American Sheet Steel Company, the American Steel Hoop Company, the American Steel and Wire Company, the American Tin Plate Company, the Federal Steel Company, the Lake Superior Consolidated Iron Mines, the National Steel Company, the National Tube Company, and the Carnegie Steel Company.

TABLE I

1

Of the last itself, Mr. Charles M. Schwab said in his testimony, before the Industrial Commission: "The Carnegie Company were large miners of ore-mined all the ore that they required themselves, to the extent of over 4,000,000 tons per year. They transported a large percentage of it in their own boats over the lakes; they carried a large percentage of it over their own railroad to their Pittsburgh works, and manufactured it there, by the various processes, into a great variety of iron and steel articles - I think perhaps a larger general variety of steel articles than almost any other manufacturing concern."

But

Transportation and Railways. The industrial concentration of which we have been speaking does not necessarily lessen competition at all. It merely gives the business into the hands of increasingly powerful rivals among whom competition may be all the more bitter because of the size of the contestants. in the principal transportation industries time has demonstrated that another rule prevails: competition has failed to protect the consumer, and the progress of consolidation has operated to emphasize the monopolistic character of the industry.

The history of transportation in this country since the establishment of the Union falls into three stages. The "turnpike period" extends from 1790, the year in which the first turnpike was constructed, until 1816, when steam navigation upon the Ohio River became fairly regular. The second stage, the " river and canal period," ends after the panic of 1837, and is marked particularly by the introduction of steam travel on the Hudson (1807), the Ohio, and Mississippi rivers (1808 to 1817), and the opening of the Erie Canal in 1825. The last stage, the "period of the railway," extends from about 1842 to the present time. In contrasting these periods, it is not meant to suggest that canals were not built before 1790, or that turnpikes are not important at the present time. As a matter of fact, a canal was built in Orange County, New York, as early as 1750; and the last few years have witnessed a rapid and costly improvement of our highways. These "periods " merely indicate the kind

1 Report of the Industrial Commission, vol. xiii, p. 448.