Sir Lyon Playfair made a very interesting speech at the
dinner of the City Liberal Club on Wednesday, on the causes of the recent depression in trade, and some of the reasons why it had lasted longer in England than in the United States. From 1873 to 1883, he said, the depression was confined to machine- using countries, though after that date it extended to countries in which hand-labour is far more important than any mechanical substitute for it. Now, the enormous growth of machinery which displaces labour was the first cause of the depression. It threw out of work an immense number of labourers in countries where machinery is largely used, and for the most part those labourers found great difficulty in finding new work to which they were competent. In machine-made boots and shoes, five-sixths of the old labour had been displaced. In the manufacture of agricultural implements, 600 men could do now what it took 2,145 men to do in 1873. In milling corn, 75 per cent, of the labour had been displaced. And not only was labour displaced by this vast change, but in substituting the new processes for the old, a great deal of fixed capital had been destroyed, and a further investment of a large amount of new capital had become necessary. "Steel, which was formerly made in puddling-furnaces, was now produced in a wholly different way, and the capital of more than 41,- millions invested in these furnaces was lost, while the labour of 39,000 men was displaced." The loss of capital in the old machinery, and the enormous production in excess of demand which the new machinery had stimulated, was a quite sufficient reason for the greatly- diminished profits of the capitalists ; while only in countries where labourers were very apt at adapting themselves to new processes, had wages soon recovered from the depression caused by the great number of labourers thrown out of work. In 1885 there was a displacement of the labour of a million men in the United States ; bat, thanks to the versatility of the American intellect, they were soon absorbed into other kinds of labour. In fact, Sir Lyon Playfair's inferences from his study of the depression were two,—(1), that when new and improved machinery is introduced, the manufacturers who use it to flood the market with over-supplies of the old goods in advance of a new demand, act very unwisely ; and (2), that versatility in the capacities of the labourers,—in other words, the " smart- ness " which a good development of their intelligence induces, —is the best security for an early recovery in the rate of wages.
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