Economics for high schools and academies

Preface

The public high school has become a people's college whose chief purpose is the preparation for citizenship. As the politics of the modern state has much to do with economics, no one could have an ordinary preparation for citizenship without at least a foundation in the elementary principles of the science of economics. Many educators have urged that the subject is too difficult for the secondary school curriculum, and therefore it should be reserved for university work. It is, however, the experience and observation of the writer of the present volume that economics, if properly presented, is as readily handled as any other subject found in the senior year of the well-equipped high school. Moreover, because only a small number of their graduates continue work in the university, it is essential that it be taught, if the school is to fulfill its great purpose of preparing its pupils for citizenship. True it is that the science of economics cannot be mastered in the high school ; but what subject is mastered there .'' It is a mistake to exclude those subjects from instruction which are best calculated to prepare for citizenship and the conduct of life. Especially is the study of economics at the present time fitted to awaken the interest of young men in public affairs and to cause them to retain their interest in high

PREFACE

school work, preventing them from leaving the school to engage in business.

The present volume represents the elements of the science simply stated. Abstract theories and discussions have been avoided, while the workings of industrial society have been emphasized. With these purposes in view, the first part of the book is devoted to a brief survey of the evolution of industrial society, and the second part gives the ordinary principles of economics in their simplest form with their application to modern industrial society. The last part treats of the relation of private economics to public economics and of the government control of industries.

The author is indebted to Professor A. J. Boynton for assistance in reading the manuscript of this book.

FRANK W. BLACKMAR.

University of Kansas, May, 1907.

Book First Industrial Evolution Chapter

I. Primitive Industrial Relations .

II. Early Family Industry . .

III. Early Medieval Organization .

IV. Later Medieval Development

V. From Handcraft to Power Manufacture

VI. Industrial Revolution ....

VII. Commercial Development . .

VIII. Modern Industrial Life

Part I

CONSUMPTION IX. The Satisfaction of Economic Wants X. Nature of Consumption XI. Consumption and Saving

100 106

Part II FACTORS AND PROCESSES OF PRODUCTION

XII. The Nature of Production 121

XIII. Land as a Basis of Production . . . -135

CONTENTS

CHAPTER

XIV.

XVII.

XVIII.

XIX.

XX.

XXI.

XXII.

XXIII.

XXIV.

XXV.

XXVI.

XXVII.

XXVIII.

XXIX.

XXX.

DISTRIBUTION OF INCOME

Principles of Distribution Rent as a Factor in Distribution Wages as a Factor in Distribution Interest as a Factor in Distribution Profits of Business Management .

Cooperation and Profit Sharing as

cesses of Distribution .

Labor Organizations Socialism and Economic Distribution

Pro

PAGE

Labor as a Factor in Production XV. The Position of Capital in Production XVI. Production influenced by Social Organization 180

Chapter I

I. Occupations of Primitive Man. — The use of the term " primitive man " in this connection refers to man in the first stages of industrial development, rather than to priority of existence. Therefore it may be used in connection with one of the natural races like the Indians of North America, or the Kaffirs of x'Vfrica, as well as in reference to the cave dwellers or lake dwellers of Europe. Clearly, it is the stage of industrial progress rather than the time man has been on the earth that concerns us. Hence those groups of mankind that have made a small beginning in the industrial arts and industrial life in general may be considered primitive men, whether they rank chronologically as the first of whom we have any record or as those apparently more recent races that still exist under primitive economic conditions.

In the early period of development, man spent nearly all of his time in obtaining food to sustain life, making a few implements for use in the chase or for domestic purposes, making ornaments for decorating the body, and providing scant clothing for its protection and meager shelter from ^un and storm. The rude implements with v/hich he worked caused him to spend nearly all his time to preserve his existence. Considering his struggle with the beasts of the forests and the elements of nature, his scanty food supply and poor protection from the elements, his lack of medical science, and deficiency in inventive power, is it not a marvel that he survived at all and reached the high state of culture of modern civilization? At best his hfe was meager until he could, by industrial progress, acquire wealth and leisure. Even then his industrial life was unfolded by slow and painful steps.

2. Methods of obtaining Food. — The food of primitive man was at first largely vegetable, consisting of berries and fruits from shrubs and trees, of leaves and bark of trees, or of roots dug from the ground. In tropical climates there were many fruits of native trees, such as the bread fruit, banana, and products of the palms, which gave an abundance during certain seasons of the year. The introduction of animal food enlarged his supply and gave greater variety of life. There are evidences of the use of animal food among the earliest records of the race. Among the relics of the cave man of Europe are long bones which have been split open for the marrow, and other indications of the use of animal food. No doubt, the reindeer served men, as it now does farther north, as means of clothing, food, and for other domestic purposes. In the ancient shell mounds along the North Sea are evidences of the extensive use of shellfish for food.

As the food was usually uncooked, large animals such as the whale, the bear, and the reindeer would be eaten in a state of decay. In such cases the tribe or group assembled at intervals at the repast.

Among the North American Indians, animal diet was more extensively used than vegetable, although maize was cultivated in a limited way by most tribes. Wild rice was regularly harvested by a number of tribes in different parts of the United States, especially those of the upper lakes. Acorns and pine nuts were staple articles of food for certain California tribes. In the early period, the tribes gathered only the seeds and fruits which nature spontaneously provided. Subsequently, they learned to till the soil in an imperfect way. This tillage became quite universal among the natural races, in warm as well as in temperate climates. In some regions, the principal diet was vegetable, supplemented by animal food; in other regions it was animal diet supplemented by vegetable food. Whenever tribes were in proximity to the sea, fish and shellfish were used to a great extent. Sometimes tribes would travel a long distance to the ocean or to a lake or a river to obtain fish in the season. A very good example of this is the assemblage of the tribes annually on the banks of the Columbia River to take the salmon as they ascend the stream. The taking of fish caused great effort on the part of primitive people and added to their variety of occupation. They became skilled in fishing, or hunting large and small game, and in agricultural pursuits, which not only enlarged their food supply but increased their inventive powers.

3. The Production of Clothing. — Primarily, clothing was used for ornamentation of the body rather than as a protection from cold, and, except among tribes like the Esquimaux, who lived in a cold climate, it was of much less importance than the procuring of food. Yet clothing had an important industrial significance. The use of bark and leaves of trees and fibers of plants brought forth methods of weaving or platting, and caused great exertion in procuring the necessary material. Whenever man lived largely by the chase, the use of furs and skins for clothing was nearly universal. The tanning of these became a great industry and they early became of staple value. In many instances the spinning, weaving, and the coloring of garments occupied much of the time of certain members of the tribe. The methods of spinning and weaving were very crude. In spinning the method of rolling the spindle on the knee was generally used. The loom consisted of vertical lines, or the " warp," attached to a horizontal limb or bar, and a corresponding bar on the ground. A stick was used to insert the thread or yarn, and another stick was used to force the thread down between the vertical strings. Prior to this method of weaving, the platting of rushes and coarse fibers for clothing and rugs was common. Also, the weaving of baskets probably preceded the weaving of cloth.

4. The Method of building Houses. — The housing of primitive folk was at first rather accidental. Caves, protecting rocks, or trees furnished natural shelters. Sometimes shelters were constructed of branches of trees and leaves, or the bark and branches of trees were leaned against the fallen trunk. Subsequently, the framework of poles was, covered with bark or brush, or with the skins of animals, or sometimes with earth. The house-building industry was of the most temporary and general nature. Yet it varied greatly in different tribes, chiefly on account of the nature of chmate and the variety of material at hand. Also, the habits of life of the natives had something to do with the nature of housing. Thus, the Indians of the buffalo plains constructed their houses of poles, arranged in the shape of a cone, and covered them with the skins of animals. These were readily portable and the house could be easily moved from place to place. In other places, under different conditions, natives would build their houses of stones, and in highly developed tribes, of dressed rock. In New Mexico, the Pueblo Indians built their houses of adobe bricks which, in a dry climate, were very durable. Again, in the South Sea Islands and Africa and South America, the natives frequently built their houses in trees or on high poles so as to escape dampness, wild animals, and reptiles. There is no evidence of a distinct commercial interest in house material or in house building. Each tribe adapted itself to the conditions and used the material most easily obtainable.

5. The Manufacture of Ornaments. — One of the early occupations of primitive people which consumed much time was the manufacture of ornaments, for personal adornment was a characteristic of all primitive peoples. It early took the form of tattooing or painting of the body. Subsequently, ornaments of shells, bones, teeth of wild animals, and woven ornaments of fiber, reeds, and rushes were common. Chronologically, the ornamentation of the body preceded the use of clothing. The latter was but an evolution of the former. Earrings, necklaces, amulets, nose rings, bells, and other ornaments were worked out with much care. For religious ceremonies, dances, etc., many articles of ornament and dress were especially constructed. Because of the lack of skill, it cost many months of labor to make some of the more elaborate ornaments for the body.

6. The Manufacture of Implements and Utensils. — The implements of war, such as the spear, the bow and arrow, the war club, and the battle-ax, became so necessary and were used to such an extent as to require great skill and labor. The utensils for preparing food, others for skinning animals and for scraping hides, hoes and spades for agriculture, and hammers and sledges for building gave opportunity for work. This manufacture taught man skill with his hand, invention of the brain, and trained his nature to continuous effort.

7. The Division of Labor. — It is difhcult to conceive of a social state in which every one did everything for himself. Such a state would preclude the division of labor. Each would find his own shelter, procure his own clothing and food, and fight his own battles against nature and with man. Many animal groups have a greater cooperation than this. However, the history of mankind reveals many social groups in which there was very little cooperation and very little division of labor. So dependent was each individual in procuring his own food, it might be inferred that in the earliest stages no concerted action existed in obtaining food. In the order of development, the division of labor was primarily between the sexes. Even now, among the lowest natural races, this is the usual form. Thus, among the Adamans the men hunt pigs, catch fish, make the canoes, implements, and weapons ; the women supply the firewood, cook the food, catch shellfish and sometimes other fish, make baskets, nets, paddles for boats, and shave the men. Among the Fuegians, the men procure most of the food, conduct all hunting and warlike expeditions, procure building material, and train the dogs. The women keep the fire, make baskets and fishing hnes, gather shellfish, and care for the canoes. They usually paddle the men about in the canoes and perform other drudgery.

In general, it may be said that among the natural races, man does most of the hunting, fishing, and fighting, and to a great extent obtains fuel and building material. The women do the basket work, weaving, and platting, care for the fire, and perform the cooking. Yet this varies in different tribes. Whenever agriculture is started, it is generally performed by the women. They also tan the hides and make the clothing. In nearly every natural race, the. women carry the burdens and do the drudgery, for the condition of woman is a species of slavery.

Among some of the natural races, the division of labor among the men is quite marked. For example, the men of the Fuegians divide the work of the chase ; among the Fijians there is a distinct class of pig drivers, and among the Sandwich Islanders there are house carpenters, canoe builders, fishermen, and farmers. There are two classes among the women: a superior class that performs the light indoor work, and the lower class, occupied in agriculture and general drudgery.

As the industries became more diversified, the division of labor became more and more marked among the barbarous tribes. Trading was not common within the tribe, but traders went from tribe to tribe to exchange surplus wares. Especially was this common when occupation was specialized in different tribes. Thus, one tribe became noted as basket makers, implement makers, or makers of special kinds of implements which became articles of commerce between the tribes. One tribe in the Samoan Islands is skilled in making canoes, another in making mats, while in the interior, in proximity to the raw material, the inhabitants make nets. Some tribes of the American Indians were skilled in making arrowheads, knives, and hatchets of flint which were swapped with other tribes with whom they were friendly.

The earliest records of the civilized nations of the world indicate that division of labor existed to a considerable extent. However, if their pre-historic life could be known, it would reveal a simple primitive life in which division of labor did not exist in a marked degree. Among the natural races, the priest and medicine man were well-defined characters. In the more advanced tribe and in the primitive life among the historical nations, classes of people such as soldiers, agricultural laborers, shepherds, and priests were distinctly marked. Thus, in the development of the social life, division of service began to appear at an early time. Whenever social order of any kind appeared, there were special persons to maintain it in a variety of ways.

8. An Artisan Class. — In many of the highly developed natural groups there was a more or less distinct artisan class. Boats, bows and arrows, stone, bronze, and iron implements were made by individuals who devoted much of their time to one or more of these industries. In some instances, house builders with special knowledge of material and structure existed. Usually this was a family affair rather than a tribal occupation. Indeed, it may be said that the family group worked as a whole in any given industry, the one most conA^enient for them, without specially trained artisans. Yet, as some individuals showed more skill than others in a certain occupation, it could not have been otherwise, when industries were varied, that labor became specialized. However, individual skill must have been early recognized among members of a tribe in the working up of raw material. Some worked at one occupation more continuously than at others, although they may have been more or less acquainted with all the occupations of the group. Among the negroes of Africa the work with iron at the forge is a specialized occupation, although it doubtless was of Semitic or Hamitic origin as the influence of these two races extended throughout Africa. Travelers report that in the South Sea Islands there is specialized labor, where wood carriers, shoemakers, and carpenters exist. It is possible that this report is merely an observation that different individuals were engaged in those occupations at the same time.

9. The Care of Stock. — The domestication of animals marks a stage of economic progress. At first the utility of domesticated animals was not great. This was discovered by degrees. The dog, for instance, is the most universal of domesticated animals, but usually he is a pet and a companion. Next to the dog, the domestic hen exceeds all animals in its universality. Cattle are found among the valleys and in East Africa; the goat is found in Africa, the pig in Polynesia, the turkey in America, and the llama in South America ; yet, among all natural races the service of animals for food or work was comparatively small, for they had not yet learned the art of their best use. After the domestication of animals, the herding of stock became a special occupation. While there are few instances of this among the natural races, yet among the early civilized races herding was one of the distinct occupations, especially after formal agriculture began.

ID. The Beginning of Agriculture. — It is not known how agriculture first began among the tribes. Tilling of the soil in many districts doubtless preceded the domestication of animals. The traditions of tribes relate how the gods were supposed to sow the seeds of grasses and plant the fruit trees for the benefit of man. In due course of time, according to theory, by supernatural help or agency, man learned to sow and to plant and to reap a harvest. Agriculture at first was tentative, being carried on by semi-nomadic tribes. Subsequently, when a tribe would permanently settle in a valley and engage in agricultural pursuits, the land was owned in common, as the possession of the whole tribe. The village community was an outgrowth of this system of landholding. The arable land was divided into lots and the head of each household was allowed to till a lot in accordance with the rule of the tribe. Each family was allowed a house lot for his permanent habitation. A common woodland, where each had the right to use the timber, and a common pasture land adjoined the village. But only the beginnings of this system can be found in natural races, hence there are striking contrasts to this community system of agriculture among the natural races. Thus, in Java, each cultivator owned and managed his own farm, the women of the household usually doing the farm work. This was the period of "hoe-culture " which preceded the domestication of animals and formal agriculture. Among the tribes of the American race, agriculture was carried on as an adjunct to hunting, to furnish a food supply of maize. Yet, in most instances, it appears to be a tribal action. At least, the property of the family group was not clearly defined. Of the two methods of tillage, it is difficult to determine which was the original, although both were carried on together in many instances. It would seem that, excepting hoe-culture, individual farming would have been the first attempt, and that subsequently the tribe found it necessary to establish rules for the cultivation of the soil which would be consistent with the community interests. But as the real object was to increase the food supply, it is easy to see that individual rights could not supersede tribal interests. As no primitive people devoted themselves to agriculture alone, but had a diversity of occupations, it must have increased the means of employment of labor.

II. Trading and Transportation. — The diversity of production in different territories gave rise to an exchange of commodities. Of the islands of New Caledonia, some were noted for the manufacture of hatchets, some for war clubs, others for stone implements, and still others for weapons. An active trade sprang up among these islands, which formed the elements of commerce. Traders passed from tribe to tribe to peddle wares. However, this was limited in comparison with other occupations, although trading of furs was common with some tribes. It was customary for a tribe to excel in the industry near at hand. Thus, some tribes excelled in pottery when in proximity to clay beds and forced by necessity to procure utensils; others, in proximity to reeds and .rushes, became basket makers, while others were workers in stone implements because of their location near beds of chert or flint. There was a limited amount of " swapping " of articles between

J3 the tribes. Within the tribe property was held in common to a great extent, which made a method of appropriating or borrowing, but it did not partake of the nature of modern trade. After individual ownership prevailed, there was a superstition about individual possessions which was not conducive to trade among members of the tribe. So strong was this notion of the personality of tools and implements that they were usually buried with the owner at his death.

Transportation was late in developing. Whenever goods had to be transported, they were either carried by men and women, more often the latter, or on the backs of domestic animals or by canoes. There was very little systematic trading and consequently little formal transportation in primitive tribes. After diversified industries sprang up, wealth was created and surplus articles were made for the purpose of exchange. The caravans of the East were used for transporting goods. At first tliese were conducted by the merchants, but subsequently they became common carriers.

12. The Ownership of Property. — The modern economic system depends primarily upon the individual ownership of property. It is difficult to determine just when and how individual ownership originated. Doubtless, like all other forms of social rights, it came about gradually. During the nomadic state, while the family group worked together, and as they traveled from place to place, it is easy to see that the idea of private property must have arisen in regard to wearing apparel and possibly household articles. It is evident that the idea must have occurred by original possession. The individuals who were foremost in the hunt were apt to claim a larger proportion of the reward. The person who worked for weeks or months on a stone implement would naturally claim a right to it, and other members of the tribe would probably concede the claim. One can conceive of the interchange of implements and clothing quite indiscriminately in some primitive tribes, but as social custom became crystallized, individual right to property became more clearly defined. In the family group of the American Indians each member of the household has his own private possessions, although in a general way they are the property of the tribe. It is evident that the wandering horde or tribe had no conception of ownership of the soil. Possession maintained by struggle with other tribes was as far as land tenure extended. After the village community became established, a well-defined ownership was vested in the public. The individual had the right to the use of a certain portion of the land, as determined by representatives of the whole community. However, at a very early stage of the communal holding of land, the small family group had the right to the house lot on which his cabin was built. This right became inalienable.

Subsequently, when the village community disintegrated, and society shifted from the ethnic to the demotic stage, the individual began to hold the land in his own right. Originally, the question of ownership was determined by might, but as time wore on custom prevailed and ruled.

13. Irregular Development of Economic Life. — The student should be cautioned against assuming too much in regard to the formal development of industrial society. Indeed, its development was all very irregular. While in general human society must have passed through a few

IS universal stages of progress, there were many exceptions to the rule, and great variety prevailed everyv^here. The variety of occupations of the tribes in accordance with their environment or their necessity and the irregularity of progress made uniformity of development impossible. Many tribes missed some of the steps of progress. For instance, the so-called " pastoral stage " of human development, emphasized by many writers, was not universal. This stage was founded on the domestication of animals. As the area occupied by the animals which were domesticated was comparatively small, pastoral development could only occur in proportion to the occurrence of these animals. The ox, the horse, the mule, the goat, the ass, the elephant, and the camel in the Old World gave rise to the economic condition of industry which emphasized this special period of development of pastoral pursuits. In the New World, the llama of South America being the only domestic animal, it is evident that there was no real pastoral period in the progress of these races. Yet there are evidences of advancement in their civilization equal to that in other lands. The making of adobe brick and the building of permanent buildings, the cultivation of the soil and the practice of irrigation, indicate a stage of development equal to that of the Old World at the period of the domestication of animals. Also, as was pointed out, there were two phases of agriculture : the first was merely the hoe-culture of primitive times, carried on principally by the women ; the latter was a more formal agriculture, in which the use of implements by man and later animal power prevailed. Finally steam power was introduced.

Nor can it be inferred that all tribes passed through the

i6 village community stage of landholding, though among the Aryans and their descendants the pastoral stage and the community stage of landholding are very clearly marked. Another point vv^hich should be carefully observed is that migration, hunting, and fishing continued after agriculture developed, and that agriculture continued to develop long after the industrial and commercial stages were well along. Economic industry is cumulative, and while in a given period one mode may predominate, former industries are continued under different forms.

The only logical and continuous method of discussion is to take up a single industry, like agriculture, and follow it through the hoe-culture system to the cultivation by animal power and steam power, studying the various changes in development, and discussing in the same manner the use of animals, implements, and building. After following the development of each separate industry in this manner, a comparative development may be presented. Whatever method of study is employed, a common conclusion will be reached; namely, that the industrial arts progressed by slow degrees, and that thousands of years passed while man was learning the meager elements of industrial life.

References.— Biicher, Carl, "Industrial Evolution," pp. 1-182; Ely, Richard T., "The Evolution of Industrial Society," pp. 1-66; Tacitus, " Germania " ; Deniker, J., "The Races of Man," pp. 144-197 and pp. 244-280.

Chapter II

14. Beginnings of Economy. — As the family was the first organized social unit, it was within its precincts that the first specialization of industry occurred. The early organization of industry proceeded with the development of the family life. Hence we must look for the beginnings of economy in the cooperation of the family group. But the transition from the economic state, in which prevailed the individual search for food, to the cooperative life of the family group, in which each had an interest in the survival of the group, was very gradual. It is marked by the slow accumulation of personal property. This was seriously interfered with by superstition which required the burial of all personal property with the dead. It was believed that the implements made and used by the individual, as well as his clothing, were a part of his personality and should go with him to the grave. But gradually there came the custom of laying by stores of goods, the building of common houses, boats, and larger implements by the cooperative work of the members of the group. This gave rise to two distinct classes of property, individual and family. Later, as the family enlarged into the tribe, a third class of collective property appeared. These classes were founded on the mode of production. When the individual made a stone arrowhead, or hatchet, or a garment with his own labor, or whenever he received such property by gift, it belonged to the family. In case, where larger groups engaged in hunting, the captured whale or buffalo was collective property and was divided among the families or individuals in the hunt. The division of goods thus acquired was based upon the proportional amount of labor contributed. While these practices indicate a certain economy of labor and of goods, the economy of time among natural races seems to have been deficient.