ས། not large enough to support such a family, you would think him an idiot. You d suggest to him that the product might, with foresight and diligence, be enlarged. there are employers in the United States-and some highly important ones—who just this answer to the demand for a decent wage. The national income, they say is not large enough to afford every family such a wage, quite forgetting that the onal income is merely another name for the sum of everyone's incomes, and that it it conceivably be enlarged. The problem of preventing unemployment and the Elem of paying good wages are in the last analysis the same problem—that is, the lem of increasing production of necessities. Of course we could not increase the national income by the simple device of giving yone more dollars. That would merely result in higher prices, unless production increased at the same time. We must find some way to increase physical producof necessities. Let us inquire a little further into possible obstacles. Though we have the labor er to produce more goods, have we the materials and equipment to do so? With Fird to materials, the answer is easy. There is no lack of farm and grazing land, no L of mineral deposits easily accessible. Under the best-known technique, more raw terial than now is used could easily be provided. But how about manufacturing ablishments and their equipment? It is commonly believed that in order to proe more it is first necessary to invest more in productive capital. A moment's reflecwill show that this was not true in a year of depression like 1921, when acres of tory space and tons of machinery lay idle and the principal concern of business men to pay interest on the equipment they could not operate. But even in normal ies, the percentage of plant capacity utilized is surprisingly low. Mr. Hoover's mmittee on Waste in Industry estimated that in the men's clothing industry it is 70 cent, in the printing industry 50 per cent, in the shoe industry 60 per cent, in the tal trades 60 per cent. "Overequipment" is the complaint of almost every manucturers' association today. A moderate guess is that if existing equipment were ly utilized under normal working conditions-that is, without employing extra shifts lengthening hours-40 per cent more production could be turned out than in a normal ar. The engineers are coming to be conscious of this situation, and there are those who ok with great hope toward their efforts to increase the efficiency of plants and of indidual operatives. It would be absurd to deny the usefulness of such work, and yet it possible that the engineers often overlook certain basic economic conditions which rround them and limit their results. No one would deny, for instance, that the techique both of machinery and management made extraordinary advances in the thirty ears between 1889 and 1919. Yet very careful statistical studies indicate that alnough productivity has shown a slowly rising trend during this period, the purchasing ower of the average yearly income of industrial and railroad wage earners has declined. Ir. Wesley C. Mitchell of the National Bureau of Economic Research published an ticle in the New York Evening Post of June 7 which confirms studies of my own in this atter. Mr. Mitchell's figures, based on research by Dr. Willford I. King, show that though production increased more than twice as rapidly as the population between 890 and 1914, the average yearly income of manufacturing wage workers could purnase in 1914 only 89 per cent of what it could purchase in 1889. In 1919, the year in hich we heard so much of "labor profiteering," the average real wage was 2 per cent lower than in 1889. And it is obvious to everyone that advances in technique have not prevented unemployment. The underlying economic fact is that you can increase the productive capacity of the individual workman as much as you like without increasing his real income, if he has not the purchasing power to absorb the product. It is sometimes argued that increased productivity lowers unit costs and hence leads to larger demand, more production, and fuller employment. This may be true in the case of a single factory or a single industry as compared with others whose unit costs do not fall so rapidly. But it must be remembered that price is after all merely an exchange value of goods. Lower unit costs all round would, therefore, amount merely to a general reduction of the price level and might not affect the market for any one product. Greater efficiency increases potentialities of production, but it does not necessarily increase effective demand for the common necessities of life. In order to improve the status of the wage worker, it is necessary to increase his purchasing power. Good statistical material is so rare, and the problem is complex, that it is impossible to offer a patent medicine as some of our industrial geniuses do when they prescribe "hard work" or "thrift" or the "open shop." But there is one direction in which it seems to me hopeful experiments might be made, although it is a direction which those in power in our economic affairs seldom take. Before indicating it, let me cite a few more facts which seem relevant. As is noted above, while per capita production has increased in the United States, the real income of the wage workers-and hence their share of the total product-has apparently declined. What, then, has become of the extra product? It must have gone somewhere, if it did not go into the things bought with wages. There are several possible outlets for it. It might have gone into the goods consumed by other classes of the population, such as farmers, merchants, officials, or the owners of industry. It might have gone into pure waste. Such an extension of waste could not have occurred in productive industry, since we have already seen that the efficiency of production, or the productivity per man, was increasing rather than decreasing. If the additional product went into waste, it must therefore have gone into waste in the distributive processes and in what may be called the national overhead, including onerations like insurance, banking, and advertising. Such of it as did not go into the non-wage working classes, or into distributive waste, must productive capital-in other words, in new plant and equipmen Now it is obvious that a shift in income in most of these direc since it either benefits nobody, or benefits those who need such b wage workers. Would it not be fair to make the assumption that wa continue to receive at least the same share of the national product as would mean that if the national product increases, direct ratio to the increase in production. Here, t wage determination. Real wages should be incr increase in national productivity. Such a principl would mean using the trend of a good production existing money wages after they had first been modifie "the cost of living." This principle, be it noted, woul percentage for the increase of wages. So much for the increasing the long term trend of real wages. how about the business cycle? What shall we do to insure labor against -.ry fluctuations of production and employment? There are some relevant facts Iduced here also from the experience of recent years. It must be remembered mendous profits were made, especially in the years 1915, 1916, and 1917, bethe fact that prices rose very much faster than wages. As a result, the consumer of the wage earners was lessened, while the income of capital was increased usly. Part of this income was turned over to stockholders immediately in ds, but a large part was added to corporate surplus, and thus found its way into ed capital investment, some of which represented genuine plant, and some of was on paper. According to the National Bureau of Economic Research, out of imated total net income to corporations of nearly $40,000,000,000 in the years 20, $17,000,000,000 were added to corporate surplus. Out of large profits, the evils of inflation-overexpansion of business, too rapid increases in plant, the ulation of large inventories at high prices. And when the inevitable collapse when effective demand proved to be too small to absorb all these products, the s of capital were in large measure protected by the profits previously accumuIt is interesting to note that dividend and interest payments, as accumulated e New York Journal of Commerce, were larger in 1921, the year of depression, than y previous year, and that so far in 1922 they are above the level of 1920. The en of the depression, of the collapse of production, was largely borne by wage ers in the form of unemployment and wage reductions. Now suppose, in the first place, that when prices started to rise wages had followed 1 more quickly. The purchasing power of the workers would thus have been sused, and hence effective demand for the necessities of life would have been sustained. he same time, the margin of profit would not have increased so rapidly, and there ld not have been such sudden accumulations of capital. Hence inflation would e been considerably moderated. Then suppose, in addition to this, that a part of surplus earnings could have been laid aside, not as insurance for capital owners in event of a period of depression, but as insurance for wage earners in such an event. ese savings, paid out to the workers in the form of unemployment insurance when the pression came, would have given them some measure of protection, and would have ped to sustain effective demand during the depression. The effect of the whole ort to stabilize and increase the purchasing power of the workers would, therefore, be the direction of smoothing out the business cycle, and hence of stabilizing and increasg production. My time has been too short even to develop these proposals at any length, much ss to defend them. I should be grateful if my hearers would regard them as hints ather than as completed recommendations. But it does seem to me reasonable that s soon as we seriously undertake to provide enough work and income to go round, we hall have to accomplish these two things: first, increase real wages at least as rapidly as ›roductivity increases; and second, provide against unemployment by levies against he profits of industry during periods of prosperity. CAN THE WORKER BE GUARANTEED CONTINUOUS EMPLOYMENT? Leaving aside the unemployable, the misfits, and the incompetent who give rise to a separate and distinct problem, and confining our analysis to the great mass of workers who are employed in industry, and leaving out of consideration casual unemployment due to a multitude of more or less incidental causes, the great bulk of general unemployment is due to two general causes: seasonal and cyclical fluctuations in demand for the products of the workshop, the mine, and the farm. Causes of seasonal fluctuations.—Seasonal variations in demand are caused chiefly by climatic conditions which on the one hand determine a great many of the consumers' demands such as for warm or light clothing, fuel, ice, etc., and on the other, influence directly a great many processes of production, such as agriculture, building construction, water transportation on rivers or harbors subject to freezing, etc. They are also caused by custom, such as the demand for flowers at Easter, for jewelry, toys, and other holiday goods at Christmas, for fireworks on the Fourth of July. Each of these trades, which is directly influenced by seasonal demand, in turn affects other industries from which it derives its raw materials: the clothing industry affects the textile mills, and the producers of the numerous kinds of trimmings which go to make up men's and women's apparel; the building trades react upon the building material trades from steel mills to brick kilns and wallpaper mills; the farmer's influence as a consumer reaches every industry which caters to his personal wants or to his requirements as a producer; finally, because of the intermittent character of their employment, and, consequently, of the flow of their earnings, the millions of workers who are engaged in all of these industries lend a seasonal aspect to all industries which supply their personal wants. Wastefulness of intermittent production.-The intermittent consumers' demand causes seasonal ordering of goods on the part of the distributor-retail and wholesale; in turn the manufacturer, in his anxiety to attain the maximum rate of turnover for his investment in order to keep down costs, concentrates his production within the shortest possible period of time preceding date of delivery; the presence of a reserve of unemployed workers in "normal" times permits of an intermittent system of production under which weeks and months of involuntary idleness are succeeded by periods of intensive work with long hours and overtime as a "normal" occurrence. That the effect of such a method of production is hurtful to the human factor in industry and injurious to the higher interests of society is obvious. It destroys regular habits of industry; it breaks down the health of workers who are driven to the extremes of intensive efforts during long hours during part of the year, succeeded by periods of idleness, shiftlessness, and frequently of dissipation. It undermines good citizenship on the part of a large element of the electorate. Last, not least, it results in large loss of production, i.e., of potential wealth to the country as a whole due to failure to utilize the labor power and the productive capacity of plants in periods of idleness or partial operation. Apart from the human and social injury which intermittent production causes, a broad view of the best ultimate interests of the individual manufacturing concern dis loses the disadvantages of intermittent production and the gains that would flow from continuous operation. This is especially true of large plants having a large overhead expense, a considerable part of which is in the nature of fixed charges which cannot be liminated while the plant is temporarily shut down. These overhead charges are a otal loss which must be charged to the profit and loss account of the business; the ¡cience of human engineering which has made considerable strides in the last decade or :wo has taught every well-informed plant manager the wastefulness of a too large labor :urnover, the costliness of training new help and their inefficiency and resultant too high cost, even when hired at comparatively low wages; the increased cost of produc:ion during the period it takes to “tune up” a plant to the state of efficiency it was in ɔrior to the shut down is an item familiar to every industrial engineer and plant manager; added to these is the loss of the more capable and ambitious workers who drift way during periods of idleness to more steady occupations unless held by the inducenent of higher rates of wages than would be necessary to satisfy them under steady :mployment; finally there is the lowering of the morale on the part of the labor force inder conditions of uncertainty which are not conducive to a sense of loyalty. These considerations have prompted a small but growing number of concerns to evise old ideas of economy of intermittent plant operation and to devise means or keeping plants in continuous operation despite the intermittent consumers' lemand. Methods of combating seasonal unemployment.-There is no time to describe in letail the methods which have enabled such concerns as the Dennison Manufacturing Company, of Framingham, Massachusetts, a large part of whose production is devoted o holiday goods, to work on an even keel throughout the year; or the Joseph & Feiss Company and the Printz-Biederman Company, of Cleveland, or the Hickey-Freeman Company, of Rochester, who are engaged in the proverbially seasonal clothing industry, >ut work steadily throughout the year; not to mention several others. They all esolve themselves into: first, intelligent planning of the work for a season or a year head; second, developing certain types or standards of products for which a permalent consumers' demand is worked up by educational work through judicious advertisng, demonstrations, educational exhibits, etc.; third, working up a stock on these roducts, when orders for the goods subject to changes in style and to uncertain demand, re insufficient to keep the plant busy; fourth, securing the retailers' co-operation which permits of the spreading of the delivery of orders over a longer period than the ew days preceding the opening of the season; fifth, inducing retailers to place their rders much more in advance of the time of the delivery than is usually the case; sixth, he training of the help in more than one operation so that workers can be transferred rom one department to another as the demand shifts from one kind of product to nother. So much for seasonal unemployment. Let us now turn our attention to the nore disastrous, even if less frequent. Cyclical depressions.-The sudden collapse of prosperity which stuck the country ke a cyclone about the middle of 1920 followed by a period of business depression from which the country has not yet entirely emerged, has once more riveted the attention of he business world, of organizations of labor, and of economists and social workers on his recurring economic plague from whose blighting touch no element of the community seems immune. Even the great majority of manufacturing concerns which developed fairly successful methods for overcoming seasonal slackness in demand found |