Economics and industrial history for secondary schools

Front matter

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ECONOMICS

Industrial History

Preface

For the last five years, the author has earnestly believed that a beginner in economics had a right to find the subject closely related to his own experience, and that of his neighbors, so that he would seem to himself to be studying the industrial life of actual men and women more than books about this industrial life.

This manual is a result of the author's effort to put into practice in his own classes the idea just stated. It is sent out with the hope that his experience may prove valuable to other teachers who may make a similar effort. So far as he is aware, no such detailed and consecutive suggestions, as are given in Part I, for the first-hand observation, classification, and interpretation of some of the most fundamental facts and processes of the present industrial system are elsewhere accessible to the student. If well carried out, it is believed that they will be found of the greatest value, as they have all been tested in actual class-room experience.

It is believed further that the method herein pursued, by which the laboratory study of existing economic life is supplemented and enriched by showing the evolution of the industrial present from the industrial past — in short, the method of union between economics proper and "industrial history — is here worked out in a new and vital way. The method of the book, as a whole, includes : (a) an observational study of some of the data of economics — facts about the structure and function of different parts of the existing economic system; (d) the consideration of a few facts of industrial history which it

8 PREFACE

is hoped may help the student to realize that the present industrial system is a result of evolution ; and (c) an elementary discussion of some of the most fundamental economic principles in accordance with which the present system now works. In short, the method is an attempt to combine, for pedagogic reasons, the inductive, historical, and deductive methods in the same book and oftentimes in the same exercise.

It should be pointed out that, while it is believed that the book will give the best results when its parts are read in the order given, it may yet be profitably used in two other ways : (1) Part III may follow Part I at once, and Part II be read as supplementary reading, as a conclusion to the course, or omitted entirely; (2) Parts I and III may be omitted, and Part II alone studied.

It should also be clearly stated that the questions were designed to be used differently in the three parts. The questions of Part I aim at a considerable degree of continuity, and it is believed will give the best results if every pupil does his best to answer all the questions of each exercise. The questions of Part II are not carefully consecutive, and different questions may well be studied by different pupils as they have special facilities for getting answers. In Part III it is not intended that an exhaustive answer to all the questions should be given. The subject is too large to be given a complete treatment in any elementary book. It has, therefore, been the purpose of the author in Part III to begin the discussion of the most fundamental economic principles and then by means of questions to lead earnest pupils to see that each subject leads out in so many directions and so far that tliey will be compelled to recognize the limitations upon their own knowledge respecting it. It will be further noticed that many subjects ordinarily included in text-books on economics have been wholly omitted. If the questions of Part III, therefore, can be so used as to leave a deep conviction that the discussions of the book are purposely incomplete, and that the study

PREFACE 9

of economics is merely begun by him who has read only these pages, their highest purpose will have been fulfilled.

In a word, the ideal course in economics for secondary schools^ has seemed to the author to be one which seeks to train the student in the observation, classification, and interpretation of the data of economics ; make him conscious of the tendencies of great evolutionary movements in industrial society; and leave him in the presence of great theoretical and practical economic problems humble, but courageous and eager for further study.

The author gratefully acknowledges his indebtedness to many persons for suggestion, courtesy, encouragement, and criticism. To most, only this general acknowledgment can be made, but personal mention is due the following gentlemen who kindly read the book in manuscript: Professor Frederick K. Clow, State Normal School, Oshkosh, Wisconsin; Mr. R. E. Cutler, Northwest Division High School, Chicago ; Dr. H. H. Belfield, Director of Chicago Manual Training School; and Professor E. G. Cooley, Principal-elect, Chicago Normal School.

The author desires to express his especial gratitude to Professor Albion W. Small, of the University of Chicago, and to Mr. E E. Hill, teacher of Civics and Economics, Hyde Park High School, Chicago, to both of whom, at every stage of the work, he has been indebted for detailed criticism and generous encouragement.

The intention has been to give, by means of footnotes throughout the text, full credit to author and publisher wherever such credit is due. In addition it is a pleasure to acknowledge the receipt of various special courtesies from the following publishers: The Macmillan Company, C P. Putnam's Sons, Charles Scribner's Sons, Longmans, Green, &

^To any one who wishes a further discussion of method, the author's pamphlet on Methods of Teaching Economics in Secondary Schools will be sent by the publishers on application.

10 PREFACE

Company, Houghton, Mifflin & Company, T. Y. Crowell & Company, D. C. Heath & Company, Harper & Brothers, The Werner School Book Company, Silver, Burdett & Company, Charles H. Nicoll, H. V. & H. W. Poor, Flood & Vincent.

Chicago, December 11, 1899.

Contents

Dedication .

Preface .

General Introduction

PAQS

Part I Industrial Observation And Interpretation

Lesson I. Introduction and Observation of Occupations . 17

II. Classification of Occupations .... 18

III. The Classification Tested 19

IV. Diagram of Local Occupations . . . . 19 V. Local and National Occupations .... 20

VI. Study of Actual Business ..... 21

VII. Forms of Business 22

VIII. Utility Defined . 23

IX. Forms of Utility . 24

X. Classification of Utilities 27

XI. Producers and Non-Producers . . . . . 29

XII. Definitions 32

XIII. Ownership and Property 33

XIV. Status and Contract 35

XV. Economic Terms 36

XVI. Graphic Statement of Industrial Facts . . 36

XVII. Statements and Questions ..... 39

XVIII. Illustration and Comparison of Prices . . 40

XIX. Statistics of Personal Consumption .... 41

12 CONTENTS

Part II Outlines Of The Industrial History Op England And The United States

PAQS

Chapter I. The Home, or Family, Period of Industry in England 47

II. The Gild Period of Industry in England . 67

III. The Domestic Period of Industry in England and

America 86

IV. The Period of the Factory System of Industry in

England and the United States . . . 134

Part III

Chapter I. Utility, Value, and Contracts .... 191

II. Production 216

III. Sharing the Product — Distribution . . . 235

IV. Some Considerations which Affect Production and

Distribution 250

V. Consumption 272

Appendix 279

Index 292

GENERAL INTRODUCTION

For a century the proverb has been in vogue: "The proper study of mankind is man." To-day it is the fashion to declare that the proper study of mankind is society. There is danger that the name "sociology" will furnish many an unwise teacher with pretexts for luring pupils away from subjects that they might profitably study to others which contain only snares and illusions for beginners. This book is not a treatise on sociology. It is, however, precisely the kind of guide to elementary study of social facts that sociologists should recommend.

Sociology declares that every thing which every man does is connected with every thing which every other man does. Before it is possible to learn this truth except by rote, we must get acquainted with a great number of facts which exhibit the principle. We must learn to see how one act affects another in our own lives; how one neighbor's conduct has to do with another neighbor's comfort; how the things that we may do depend on the things that others have done.

There are two ways of getting this knowledge. The one is by study of history, political economy, and political science. The other is by observing people, and particularly by mingling with people in as many occupations and circumstances as possible. Neither of these two methods is self-sufficient. Neither of them is wholly trustworthy without the other.

The study of the sciences that deal with particular ways in

14 GENERAL INTRODUCTION

which men act in society will never lose its charm, however ; it will never cease to enlarge and instruct the mind ; it will never fail to furnish elements of preparation for good citizenship. By study of history, economics, and civics, we in a way acquire as our own the experience of all the world.

On the other hand, we do not know society as we should if we learn about it merely at second hand. If we never saw machines, but merely read descriptions of them, we could not become very expert machinists. If we never stepped foot on a ship, nor looked upon the ocean, we would not be likely to have great skill as marine architects. In somewhat the same way, if we merely study the sciences of society, we will know, after all, only an artificial substitute for real men and women. We need to open our own eyes and learn for ourselves. All the social facts that any science can find are passing before us every day. "We are not intelligent members of society until we know how to think these facts together in rational form.

This book is a wise guide to proper use of both these methods. The student who learns from books alone is apt to be helpless with his knowledge when he is called upon to apply it. The knowledge that comes from observation alone is less likely to be of an impractical sort, but it is more likely to lack breadth; and it may, therefore, be ill adapted to application under changed circumstances. This book aims to give training that will make scientific knowledge practical, and practical experience scientific.

Another rare feature in this book commends it especially to those who want to secure the highest order of results from study of society. The schools should teach civics, not to make officials, and economics, not to make financiers, but both to make good citizens. In too many cases, books on govern-

GENERAL INTRODUCTION 15

ment leave the impression that government is an end in itself ; and books on economics confirm the ready belief that to make money is the supreme duty of man. This book tends to the impression that business and politics are out of gear unless they serve to promote large and true life. Pupils can hardly follow the plan of study here proposed without gaining more liberal ideas of the things that most conduce to human weal, and are consequently most worthy and honorable.

The kind of study here proposed is not mere reflection on dead, heartless abstractions. It is investigation of the intimate concerns of actual life. It stimulates social interest; it enlarges human sympathy; it develops love of justice; it rouses public spirit; it deepens the sense of civic obligation. In a word, it shifts the pupil's outlook from the standpoint of his private selfishness to that of the general welfare. Study of society by this method is thus not merely a preparation for citizenship, it is an apprenticeship in patriotism.

Albion- W. Small.

Part I Tion

Lesson I

INTRODUCTION AND OBSERYATION OF OCCUPATIONS

The satisfaction of human need for food, shelter, clothing, amusement, instruction, social life, and inspiration toward doing right, costs continual human effort. To say this in another way, the problem of getting a living, using this word in the largest sense, takes a great deal of the time and effort of a great many people whom the student knows. The different ways actually taken by different people in their efforts to get a living ; the conditions imposed upon us by nature and by ourselves through custom and law ; the difference between our present methods of getting a living and those of our ancestors; some queries about future methods of getting a living, and the problem of trying to find some order, unity, and law underlying all these activities and processes ; are the tasks to which the student is invited. For a while his text-book may be the members of his own family, his neighbors, his schoolmates, and all those persons he meets upon the street. He will often be directed to observe and report upon that which is familiar to him, but every question should be answered with his best thought, and in writing, for questions will soon appear that demand keen observation and clear thinking. The exercises will prove of little value to a student unless constantly kept related, through his observation and thinking, to actual occupations, persons, and industrial processes. A simple way in which to begin to study industrial conditions is as follows :

Make out an alphabetic list of fifty different occupations by which you know persons are regularly getting a living.

Lesson II

CLASSIFICATIOlSr OF OCCUPATIONS

1. Write the following list of occupations in a column where they can easily be seen at a glance: Blacksmithing, farming, stage-driving, occupation of a commission merchant, medicine, tramping or begging, shoemaking, quarrying, ^ express business, real estate business, ministry, stealing, car pentry, mining, driving a locomotive, selling dry-goods, teach ing, occupation of an idiot, tailoring, fishing, conducting a street car, cigar-dealing, care of children and home by a mother, occupation of a poorhouse inmate, watchmaking, icecutting, running a steamboat, grocery business, hair-cutting, pleasure-seeking by an idle rich person.

2. Study the list to determine those occupations which are at bottom most alike.

3. Make six groups of live occupations each on the basis of this likeness,

4. Give a name to each group.

5. Criticize your grouping by asking these questions:

a. Are the groups distinct each from the other? They should be.

b. Is each occupation in the list included in the groups? In case of a somewhat complex occupation, it may take more than one gi'oup to include all its activities. The question is: Can all the processes of each occupation be included in the groups formed? They should be.

G. Be prepared to give reasons for your classification, and to defend it in class.

DIAGRAM OF LOCAL OCCUPATIONS 19

Lessoist III

THE CLASSIFICATION TESTED

1. Classify, on the basis of tlie grouping adopted, an alphabetic list of one hundred and fifty occupations not already classified.

[Note. — The question will arise whether to classify some person from the point of view of the whole business with which he is connected, thus making each business as a whole the unit of classification, or to classify him from the point of view of his individual activity. A stenographer in the employ of a railroad company might be classified with railroading, and one in the employ of a college president with education, in which event the two stenographers would appear in different groups. On the other hand, they might be classed as stenographers per se, in which event they would be gi'ouped together. The first way of grouping is more convenient, more like the practice of the Census Bureau, and the latter, if well done, is more accurate. On the whole, for the purpose of these lessons, it will probably be found more satisfactory to classify most individual occupations on the basis of the whole business with which they are connected, rather than upon the basis of the individual activities of the persons themselves.

2. Make note of all occupations difficult to classify.]

Lesson IV

DIAGEAM of LOCAL OCCUPATIONS

1. If the town in which you live has a directory, begin with the first name under some letter and read consecutively until the names of one hundred persons who are reported as engaged in gainful occupations have been read. Classify these occupations as in the preceding lesson.

2. If some of these occupations can not be classified on account of lack of information about them, for example, Ijiborer and clerk, note also the number unclassified.

3. Find what per cent the number in each group is of the hundred occupations noted; and make a series of lines, or bars, accurately drawn to a scale, which represent by their lengths :

a. The total number of occupations noted. h. The per cent which the number in each group is of the total.

4. Make note of all difficulties for discussion in class. [Note. — Each pupil should have a note-book in which all

diagrams and other valuable results of the study may be conveniently kept. Diagrams may be made more attractive by using different colors. Some of the diagrams in this lesson, and others that follow, may be made large enough to be hung up in the recitation room.

If each pupil has a different list of names assigned from the directory, the total number of occupations reported on by the class will be as representative of the occupations of the whole town or city as j)ossible.

If there is no directory, each pupil may report upon the gainful occupations of all the persons residing in a certain block, or within certain limits along a certain street, the assignments to different pupils being so planned that the total of their reports may be as representative of the whole town as possible. The occupations so obtained may be grouped, computed in per cents, and represented by lines, as directed above.]

Lesson V

LOCAL AND NATIONAL OCCUPATIONS

1. Make another diagram in your note-book after the same plan as that of the preceding lesson, except that the numbers used are the totals for the class instead of your individual numbers.

2. Make a third diagram based on the following figures of the United States' Census for 1890:^

'For detailed statistics of occupations of persons iu the United States in 1890, see Statistical Abstract of the United States for 1898, pp. 20-23.

STUDY OF ACTUAL BUSINESS 21

a. Whole number of persons engaged in

gainful occupations in the United States, 22,735,661 h. Engaged in extractive industries . . . 9,013,201

c. Engaged in professional, domestic, and

personal service 5,304,829

d. Engaged in trade and transportation . 3,325,962

e. Engaged in transforming industries . . 5,091,669

Lesson VI

STUDY OF ACTUAL BUSI]S'ESS

In order to give satisfactory answers to the following questions, a concrete business, no matter how simple, with which the pupil is best acquainted and about which he can learn most accurately, should be chosen by each member of the class. Much depends upon the accuracy and directness of the information. The very soul of this work is its dependence upon facts. In asking questions pupils need tact. It may be explained that names of persons and of companies are not wanted. What is wanted is to find out the machinery of the business, just how it is carried on.

1. Name of the business or occupation.

2. Give a brief description of the land, building if any, and other equipment required to carry on the enterprise.

3. Who owns the land, a person or a group of persons?

4. What evidence of ownership does the owner have?

5. Who owns the building?

6. Who owns the rest of the equipment?

7. Who actually carries on the business, "is back of" it?

8. What different grades of helpers does he have?

9. Give the approximate number in each grade.

10. Give the ordinary business name of each form of payment which is made to owners simply as owners of something necessary to the business.

11. Give the ordinary name of each form of payment that is made to persons as active participants in carrying on the business, both in the management and in the ordinary work.

12. Are there any other persons, or groups of persons, aside from those who furnish it materials or buy its product, who regularly receive some payment from this enterprise? If so, name them and explain on what ground they receive these payments.

13. Enumerate all the different groups of persons who, from what they own or from what they do, regularly furnish something necessary for the carrying on of this enterprise.

14. Give the business name of each of these persons or groups.

Lessor VII

FOEMS OF BUSINESS

In the preceding lesson some important words were used that may, perhaps, be new to certain members of the class and not understood alike by others. To the end, therefore, that the words may have a definite and common meaning, the following questions are proposed :

1. Find actual business enterprises illustrating as many of these words as possible :

a. Partnership. h. Stock company.

c. Corporation.

d. Profit-sharing enterprise.

e. Cooperative enterprise. /. Trust. ^

2. Write a description of each with the aim to distinguish it from all the others.

3. Find out something about the manner of organizing a business of each kind in accordance with the laws of your state.

4. Which is most commonly found in your locality? Why?

5. What is the object of each form of organization?

iPor meaning of terms, laws of state, etc. , consult : the dictionary ; the encyclopedia ; Lalor, Cyclopedia of Political Science and Political Economy, vol. Ill, index — Maynard, Merrill & Co., New York ; the Revised Statutes of your own State ; Schloss, Methods of Industrial Remuneration — 2d. ed., 1894, G. P. Putnam's Sons, New York, or 3d. ed., 1898, Williams & Norgate, Oxford,

UTILITY DEFINED 23

Lessost VIII

UTILITY DEFINED

In the lessons that have preceded, opportunity has been gi^en for the idea to emerge that the apparent chaos of business activity which one observes, especially upon the corner of a crowded city street, is only apparent, and that all these activities can be reduced to five or six well defined groups of activity. It has also appeared from the study of concrete business units, or enterprises, that, while there is great variety in form of organization and relationship of persons to the enterprise, the same functions appear in all enterprises whether they are all performed by one person or by many. As both of these results are in the direction of a perception of uniformity and simplicity and order in what at first seemed to be very complex phenomena, there remains one further step to take in the same direction. Can we not find some common purpose in the activities of all workers? Is it not possible to discover some principle of unity which will allow all workers to be thought of together? Are they all in fact doing fundamentally the same thing, namely, creating utility?

1. Write a brief but complete description of a typical day's work by some one intimately known to you.

2. What was the object, or objects, upon which at some time during the day he exerted his activity?

3. Tell, precisely, what change took place in this object as a result of the expenditure of the worker's energy.

4. How does the desirability of the object, to those in any way affected by the change, compare after the expenditure of energy with its desirability before? Is the object more or less desirable?

[K"OTE. — The word "desirability" is here used not in an absolute sense, but as related to human wants. These wants are not always wise, or moral. "Primarily, and as a condition to his [man's] mere existence, he requires food, commonly, also, clothing and shelter. He has appetites for art, music, philosophy, cigars, and vice. He desires comforts and luxuries, protection from the violence of nature, from the wrongs of men, and from the attacks of beasts and microbes. He wants his steak broiled and his clothes brushed. He likes to be preached to, and sung to. He wants books and boats, and racehorses, laces, parks, theatres, and eyeglasses, chairs, balloons, railroads, panoramas, fortune-tellers, phrenologists, and humbugs."^]

5. From the point of view, therefore, of desirability of the object worked upon, as different men judge desirability, what did the person really do, or attempt to do?

G. Show whether or not other workers, working for gain, from affection, or from a charitable motive, attempt to make a similar change in the objects they work upon. Give illustrations,

7. Write out a definition of the word ''utility."

Lesson IX

FORMS OF UTILITY

It is the want-satisfying quality — utility, that the wants of mankind spur men on to try to produce. The question now comes, how is utility produced? Must men have materials in which to store this quality? If so, what is the som'ce of these materials? How can men manipulate materials so that utility may be added to them? Is complete utility added to material by one worker as a rule, or does the same material pass through many hands in succession, each worker adding some utility? Since utility is a quality in material which satisfies the want of persons, may changes in human wants, as well as changes in objective materials, cause utility to emerge and disappear?

If the following specific questions are carefully answered, much light may be thrown upon the more general questions of the preceding paragraph.

^Davenport, Outlines of Economic Theory, p. 14 — 1896, The Macmillan Co., New York.

FORMS OF UTILITY 25

1. What human wants are there that are sometimes satisfied directly by nature, without other effort by man than that required to appropriate what nature furnishes? Give as varied examples as possible.

2. When man does not have his want satisfied by nature, but creates this quality of satisfying want (utility) , from what source does the material upon which he works, and in which he stores utility, come? Illustrate. Is there any other primary source?

3. Give examples of utilities that have been wholly created by the effort of one man, possibly in a succession of processes, or partial processes ; give examples where two workers in successive processes have created utility ; examples of three workers ; more than three ; the example where the whole process of creating utility is divided among the largest number of grades of workers known to you.

4. Define division of labor.

5. Give illustrations of division of labor among places; among persons.

6. Give in one word the kind of utility that is added to coal by being broken out of the solid vein, to clay when pressed into moulds to make brick, to stone when carved into a statue.

7. Give another word which describes the kind of utility created by carrying lumps of coal from a mine to a city.

8. Name in one word the kind of utility that coal possesses by being in a grate in December rather than in August, by having ice in the house in August rather than in December.

9. Give other examples of each kind of utility.

10. When the actor arranges scenes, costumes, attitudes, and facial expressions so as to send, on the vehicle of vibrating ether, intense satisfaction to the eye of the onlooker, show whether or not he creates utility ; show whether or not he also creates utility when he sends pleasing sounds on the vehicle of vibrating air.

11. Give other kinds of utility if you can.

12. Is the spiiitual uplift which comes from the preacher utility? Why? Is the legal advice which a lawyer gives to a client utility? Why?

13. Show that Phillips Brooks, as a preacher, and the boy who blacked his boots, were doing fundamentally the same thing.

14. If men feel new wants for things to which, though in existence before, they had been indifferent, do those things acquire utility? Why? Give examples. Do spinning wheels, old-fashioned furniture, etc., that once lay forgotten in garrets and lumber rooms, illustrate the point? Give reasons.

15. If men cease to care for some thing which they formerly wanted, does this lose utility to some degree? Why? Give examples.

16. What are the effects of fashion upon the utility of a commodity? Illustrate.

17. Discuss the following formula, and its interpretation as a convenient short statement of the truth about any productive enterprise. Do you think of any business enterprise that can not be included in the formula? Explain.

a. Society 4-man4-capital+ natural resources=utility. J. A more accurate statement might be: Society, combined with individual men, ]

As undertakers |

As directed workers, f combined with capital, combined with natural resources, may result in utility, c. Which formula may be interpreted as follows : In subordination to the public opinion and statute laws of the community as a whole, individual men direct human energy in the use of tools and machinery upon the materials and forces which natvu'e furnishes, in order to produce something to satisfy human want.

CLASSIFICATION OF UTILITIES 37

18. Do individual men ever carry on business enterprises for tlie production of utility in violation of public opinion and statute laws of society? Give examples.

19. Which is the more common method of carrying on business — subject to the will of society or in violation of it? Give reasons.

20. Do individuals ever cause changes in public opinion and in laws for the benefit of their own business? If so, how?

21. What is the harm of it?

22. How can it be helped?

[Note. — For a series of interesting articles entitled The Conduct of Great Busitiesses, consult "Scribner's Magazine," beginning January, 1897.