RECENT ECONOMIC CHANGES.*

THESE two books are written by well-known and accomplished American economists. Mr. Atkinson's work, as its title indicates, is confined more to the consideration of the progress of the United States than is Mr. Wells's, which takes a wider view ; but they both partially cover the same ground, and may well be read together. In Mr. Wells's treatise we have an inquiry into the economic changes that have occurred during the last fifteen or twenty years, and which have shown them- selves in the remarkable depression of trade and lowering of prices that has been almost universal. The importance of such an inquiry cannot be overrated. Every-day civilisation becomes more complex, and the combinations formed are increasingly difficult to grasp, and in order to understand them in any degree, and to be prepared to act for the beat in the future, it is necessary to take a wide and comprehensive view of the situation, and not only carefully to note what is going on, but also to study the record of what has previously happened. By simply tracing out and exhibiting " in some- thing like regular order the causes and extent of the industrial and social changes, and accompanying disturbances which have specially characterised the last fifteen or twenty years of the world's history," Mr. Wells has produced a book of intense interest, and one that can be read and re-read with advantage, so full is it of valuable and suggestive matter and information.

After a period of the most extraordinary inflation in trade and prices, came the year 1873, which was the first of the years of the depression which has lasted, with but slight intervals of relief, until quite lately. The cause of this has been explained by a variety of theories : the destruction of property by wars, bad harvests, unfortunate or worthless speculations, over-production (i.e., an amount of production in excess of demand at remunerative prices), the appreciation of gold, the depreciation of silver, protective tariffs, or their absence, have been assigned among a number of other causes. Detailed examination, and the evidence of statistics, however, in no way confirm these views ; and as the most marked characteristic of the recent economic disturbance was its universality, it may safely be inferred that the agency which • (L) Recent Economic Changes; • and then- Effect on the Production and Distribu- tion of Wealth, and the Well-being of Society. By David A. Wells, LL.D., D.C.L. London: Longmans and Co. 1890.—(2.) The Industrial Progress of the Nation. By Edward Atkinson, LL.D., Ph.D. New York and London : G. P. Putnam's Sons. 1890.

was mainly instrumental in producing it must have been universal, not local, in its action.

It is in the greatly augmented control which man has obtained over the forces of Nature, and in the way in which this control has been increasingly applied, chiefly through machinery, in aiding the work of production and distribution, that Mr. Wells finds a cause sufficient to account for the larger part, if not the whole, of this disturbance. Without sufficient data, an accurate estimate of the saving in time and labour by these means cannot be made, but in not a few departments of industrial effort, a saving of 50 per cent., and in some of 70 or 80 per cent., has been effected, and Mr. Atkinson places one-third as the lowest average that can be taken for the last twenty or thirty years. The opening of the Suez Canal in 1869 was an event of immense significance, and, as Mr. Wells points out, dislocated the existing course of trade " to an extent sufficient to constitute one great general cause for a universal commercial and industrial depression and disturbance." The trade of India and the East with the West had for nearly three centuries laboured at slow and uncertain length in sailing-ships round the Cape, making the storage of vast quantities of Eastern produce at an available place in Europe a necessity. That place, in virtue of its geographical posi- tion, was England, where a vast system of warehousing and distribution, and of British banking and exchange, arose. By the opening of the Canal all this was altered. Sailing- vessels representing ten million tons, unfit to go through the Canal, were virtually destroyed. Large steamers were built, and so quickly improved, that those of 1870-73 were displaced in 1875-76 and sold for less than half their cost. This process has since been repeated, and is still going on ; and Mr. Wells considers that we have here probably the most striking example that can be found of the economic principle "that nothing marks more clearly the rate of material progress than the rapidity with which that which is old and has been considered weak is destroyed by the results of new inventions and dis-

coveries." Nowadays, Indian or Eastern products needed for Mediterranean ports stop there en route ; whilst stocks, instead

of coming to England, are stored at the place of production and supplied direct, thereby avoiding numerous and costly agencies :-

" Thus a Calcutta merchant or commission agent at any of the world's great centres of commerce contracts through a clerk and the telegraph with a manufacturer in any country—it may be half round the globe removed—to sell him jute, cotton, hides, spices, cutch, linseed, or other like Indian produce. An inevitable steamer is sure to be in an Eastern port, ready to sail upon short notice ; the merchandise wanted is bought by telegraph, hurried on board the ship, and the agent draws for the price agreed upon, through some bank with the shipping documents. In four weeks, in the case of England, and a lesser time for countries intermediate, the shipment arrives ; the manufacturer pays the bill, either with his own money or his banker's ; and, before another week is out, the cotton and the jute are going through the factory ; the linseed has been converted into oil, and the hides in the tannery are being transformed into leather. Importations of East Indian produce are also no longer confined in England and other countries to a special class of merchants ; and so generally has this former large and special department of trade been broken up and dispersed, that extensive retail grocers in the larger cities of Europe and the United States are now reported as drawing their supplies direct from native dealers in both China and India."

The development and improvement of the British mercantile marine, which does the greater part of the world's carrying trade, has been extraordinary. Not only has the size of steamers been increased, thus rendering possible business that was before impossible, through increased efficiency and low- ness of freights, but the cost of construction has been greatly reduced—viz., from £12 and £13 a ton a few years ago, to £7— whilst the proportion of coal to cargo has been reversed. Such is the efficiency of the modern marine engine, that it has been calculated " that half-a-sheet of notepaper will develop sufficient power, when burned in connection with the triple- expansion engine, to carry a ton a mile in an Atlantic steamer." Further, the larger the steamer, the smaller in

proportion is the crew, whilst other economies are claimed in construction and maintenance concurrent with such reduction. Under these conditions, " the ocean transport of fresh meats from New York to Liverpool does not exceed id. a pound," a bushel of wheat (60 lb.) is carried the same distance for a penny, whilst the regular charge for boxed meats from Chicago to London has been id. (.5 cent) per pound. On land, the revolution in the carrying trade has been still more remarkable.

Less than forty years ago, there was practically no railway system in existence. At the present time, there are about 350,000 miles of railway mileage in the world. Bessemer's dis- covery for the making of cheap steel has been followed by great saving in maintenance and increased security and efficiency, whilst it has enabled the railway system to be extended at a great reduction in primary cost. A ton of wheat, coal, iron, or other commodity is now carried on the standard railroads of the United States at •68 cent per mile. Mr. Atkinson's investigations show that " in 1860, the greater part of the wheat now consumed in Europe could not have been moved 150 miles without exhausting its value. Now, wheat is carried half round the world at a fraction of its value." Turning to the marvellous saving of time and labour in production during the last quarter of a century, Mr. Wells devotes much space to the discussion of this subject. It is one of absorbing interest, and in both these works it is

handled with very great ability and wealth of illustration, which can only be referred to here. Machinery is essential to cheapen and increase production; but being itself very costly, it requires large, and often associated capital, to establish it, whilst every effort is made to use it to the utmost. Mr. Wells says :- " A given amount of labour, operating through machinery, pro- duces or distributes at least a third more product on the average, in given time, than ever before. Note the natural tendency of human nature under the new conditions. The machinery which thus cheapens and increases product, is, as a rule, most costly, and entails a like burden of interest, insurance, and care, whether it is at work or idle; and the possessor of it, recognising this fact, naturally desires to convert outlay into income by utilising it to the greatest extent possible. Again, a man who has learned by experience that he can dispose of a certain amount of product or service at a profit, naturally reasons that a larger amount will give him• if not a proportionally greater, at least a larger aggre- gate profit; and as the conditions determining demand are not only imperfectly known, but to a great extent incapable of exact determination, he discards the idea of any risk, even if he for a moment entertains it, and pushes industrial effort to its maximum. And as this process is general, and, as a rule, involves a steady increase in the improved and constantly improving instru- mentalities of production and distribution, the period at length arrives when the industrial and commercial world awakens to the fact that there is a product disproportionate to any current re- munerative demand. Here, then, is one and probably the best explanation of the circumstance that the supply of very many of the great articles and instrumentalities of the world's use and commerce has increased, during the last ten or fifteen years, in a far greater ratio than the contemporaneous increase in the world's population, or of its immediate consuming capacity."

Further, it should be borne in mind that prices must be kept down throughout as low as possible; for if they are not, other speculators would start new factories, or a substitute would be found for too costly an article.

It may be urged that these influences have always been at work, and hence are not adequate to explain the recent depression. This is admitted in kind, but not in degree. It is pointed out that never before in the world's history has such progress been made in the system of transportation by land and by water, nor in the way of production with a given amount of labour in a given time. It would seem as if for a century the intelligence and industrial activity of the world have been preparing for industrial effort, by inventing and perfecting tools and machinery, building factories and workshops, and devising quick and easy methods of communi- cation and distribution. "The equipment having at last been made ready, the work of using it for production has begun, and has been prosecuted so efficiently, that the world has within recent years, and for the first time, become saturated, as it were, under existing conditions for use and consumption, with the results of these modern improvements."

There is no more vivid example of the results of recent economic changes than the condition of the wheat-supply of the civilised world. " The modern miracle of the loaves," as Mr. Atkinson terms it, is this, that the equivalent of the labour of four men for one year, aided by the best machinery, will grow in the great wheat-fields of Dakota, turn into flour, and place on a dock in New York, a thousand barrels of flour, or the yearly consumption of a thousand persons. From New York, at a mere fraction of _a cent per pound, it can be delivered at almost any European port. Practically there is nowadays but one market for grain,—the world. Owing to the modern means of distribution, it seems impossible that any serious rise in the price of grain should take place. If failure of crops occurs in one area, it is counterbalanced by the yield in another, perhaps at the opposite side of the globe. The whole earth has become, as it were, one vast farm of un- known capabilities ; whilst the granaries of the world are to no small degree " ships and railroad-cars, in the process of movement to the points of greatest demand for consumption.' Mr. Wells, we may venture to point out, falls into an error when he says that the new process of roller-milling produces more flour than the old method. He puts the per-tentage of flour at 74 and 66.6 respectively. But the ancient method of grinding with stones produced 75 per cent. of flour, or actually 1 per cent. more than is yielded by the new process.

From a purely humanitarian point of view, the low price of wheat—and what applies to wheat applies to all kinds of grain —is an excellent thing. But it has reduced farming in England and on the Continent to the lowest stage of vitality. The steel rail, the modern steamship, and the Suez Canal form the real explanation of the present agricultural crisis, whilst, combined with the enormously increased powers of production, they are at the bottom of the general depression in trade. Nor is there any reason to suppose that we have advanced beyond the threshold of what will be done in the fullness of time in perfecting ways of production and distribution. In the opinion of competent judges, the day is not far distant when the steam-engine will be superseded ; whilst it is probable that the correspondence of the civilised world will be carried on mainly on an electric basis.

It is impossible within the limits of this article to refer to the numerous collateral questions of extreme interest discussed by Mr. Wells. Among these will be found chapters on the discontent of labour, commercial legislation, bimetallism, and the economic outlook. Mr. Atkinson, whose chapters have previously appeared in American magazines, and who tells us that he has been all his life a student in the art of nutrition, writes instructively on the " Missing Science," that of cookery, and has much to say on the waste of the food-supply. Both writers are men of large and comprehensive views, and these two books will fully repay an attentive perusal.