gestions for raising revenue should be referred to one and the same committee.1

Two or three different plans, however, providing for unified recommendations as regards appropriations and revenues have been proposed and are now under consideration by Congress. The essential thing is that the entire management of both expenditures and revenues be considered by a single body, so that there will be unitary action.

It is no accident that every move for better government in recent years has been along lines approved by the experience and practice of business. Though it lacks the element of profit which is the spur to efficiency in business, the operations of government, once its policies are decided and have received form in law, are exactly parallel to those of business. It is in the application of business principles rightly understood to public affairs that the road to better government in the future lies.

'On December 6, 1920, in both the House and the Senate, committees on appropriation were formed to which all appropriation bills must be referred, thereby making an arrangement by which all expenditures may be considered by a single committee in each house. This no doubt is the entering wedge for a unified budget bill, which will probably be passed by Congress at this or the next session.

II

PROBLEMS OF LABOR

VI

LABOR, CAPITAL, AND THE COMMUNITY

To secure the greatest social good from the interaction of labor, capital, and the community, the American standard of living must first be preserved and then improved. This standard now depends and always will depend upon keeping up the American level of real wages, and this means that ways must be found to keep the costs of production in competitive fields, whether foreign or domestic, low enough to meet business rivalry without lowering this level. Before taking up the national aspect of the relations between labor and capital, we should consider an international aspect-the proportion which our export trade may safely bear to our total trade, internal and external. It is, of course, impossible to express this proportion in exact figures, but the considerations upon which the ratio can be roughly estimated are sufficiently obvious.

The principal advantages of an export trade in American manufactures are that it increases the volume of production and, therefore, tends to lower the cost (an advantage in which the home consumer shares); and that it stabilizes industry by furnishing a safety valve through which, when a temporary depression in the home market reduces the home consumption of American commodities, over-production can escape. Certain enthusiasts urge us to devote our utmost efforts to building up an immense export trade. They paint in glowing colors the

vast opportunities opened to the American exporter by the disorganization of the European export trade during the war. But they overlook the fact that an export trade in American manufactures, expanded without any regard to considerations other than the increase of that trade, involves serious dangers. American exports must compete abroad with the products of cheap labor. If we increase their volume beyond the point at which they represent chiefly the sale of a marginal surplus, our manufacturers will be under great pressure to lower the cost of production, in order to meet that of foreign countries, and this process may well involve lowering the wage standard of American labor.

As a broad principle our export trade should not be increased without reference to the rate of increase in our domestic trade. Just so far as we improve the standard of living in the United States, just so far shall we develop home consumption for American manufactures. To that point at least can we beneficially extend our export trade. The reason is simple: under such conditions, our exports would increase, and at the same time their volume in relation to that of our internal trade would remain much the same; in short, their true character as an outlet for our surplus production would be preserved. The maintenance of this balance between our external and our internal trade would be facilitated by an improvement in the quality as well as by an increase in the quantity of goods which we make for home consumption. At the present time we import a vast amount of goods manufactured abroad from raw material with which the United States is amply supplied, and with which, in some instances, the United States furnishes the foreign manufacturer. The country would secure definite and important gain if, instead of exporting raw material and importing