quarters declared any dividend at all. It is added, 'As the Oldham mills are understood, for the most part, at least, to possess the latest improvements in machinery, and to be worked upon the most economical principles, the above list may be taken as representing the entire cotton industry of the country.'1 With one more example of the way in which prices were working for the capitalist, we conclude this review of his position. The margin between the average price of 1lb. of raw cotton (what are called 'uplands' in the trade is regarded as the standard sample) and the average price of 1lb. of twist or of cloth, is taken as an index of the remunerative effect of prices on the producer. Taking 'twist' and 'cloth' together, that margin was in 1877 lower by d., or nearly d., than it had been in 1876. (Ibid. p. 1.) The fraction looks insignificant, but it is really nearly 7 per cent. of the whole margin in question, and its disappearance drove down dividends to zero or to absolute loss, perhaps to an exhausting deficiency, inconsistent, if continued, with solvency. But yet once more, this ill-omened year closed with a still darker financial gloom. The margin to which we have referred as reduced by 3d. on the average of the twelve months, sank in December last d. lower yet. Such was the starting point for the new year's hopes. We have seen 3 per cent. was the average dividend of the year; how much of this would be left when this fall of d. below the miserable average of the year's margin had taken place? Profits, fast disappearing, must evidently have vanished altogether. No wonder, surely, that the mill-owners began to bethink themselves of that retrenchment which ought to have occurred to them long ago. But with stock and plant once set up, expenses are fixed and irreducible. Cost of material is beyond their control. Economical processes wait upon invention and follow not the exigencies of trade. Wages were the only department in which a reduction was possible. They gave due notice of the reduction of 10 per cent., and while the notice was running the price fell still lower and lower stilleven 'in the lowest deep a lower deep' revealed itself, and the cotton interest seemed likely to land in a bottomless pit of embarrassment. In short, it had now been so long let go ever from bad to worse, that the men, or their secretaries, urged with a show of reason, that were they in April last to have accepted the niloob 1 Ellison and Co.'s Annual Review, p. 2. reduction, it could not have improved the masters' position, since the pressure to secure business must have transferred the ten per cent. at once to the buyer of goods. This, if a true, was but a short-sighted argument; for the moment the tide of decline began to turn, the advantage to the manufacturer must begin to be felt, and would clearly be felt sooner than it would have been if the reduction had not been made. In order to make this plain, let us review the constituents in the price of a piece of 'shirtings,' such as forms the major part of Lancashire products. A piece weighing 84lb., and measuring 38 yards, was selling at the end of May at 7s. 3d. For this would be required 81b. of cotton s. d. at 6d. per lb. = 4 O The spinning wages for the same would = 0 73 The weaver's Now, 10 per cent. off each of the wages items would reduce the cost to about 7s. Id. Let us assume that the continued fall of the market would enable the buyer to secure the difference for the moment, i. e. to buy the piece at 7s. 1d. Still, the moment a favourable turn brought the price above 7s. 1d. a benefit would begin to accrue to the seller; whereas otherwise none would have accrued till it rose above 7s. 3d. This is so plain, that it seems extraordinary that sharp calculators, as the secretaries of the Weavers' Association evidently are, should not have perceived it. The position was like that of a ship on her beam-ends in a squall. The top hamper is It drops overboard, but she rights the sooner. cut away. In proof of the continuance of the decline in the price of cotton fabrics through the first four months of this present year, we may adduce the admission of the operatives themselves. The weavers' secretaries writing on May 1, estimate 10 per cent off wages as equal to a reduction of Id. in 18 yards of stuff, and they add that the fall of price since January already equalled four times that amount, yet without causing any increase in demand. The same authorities estimated a dead loss weekly of 60l. (or over 3,000l. a year) on every 500 looms, to their proprietor. The further decline, however, was posterior to the notice of the reduction of wages. Still it made it obviously more imperative to act upon that notice. In fact, the practical conclusion seems to be, that which we have above indicated, viz. that that notice ought to have been given some nine months sooner-perhaps even earlier still. Had it been so, most of the nil returns of dividend in the last half of 1877 would probably have been saved. At any rate the operatives had had the benefit of full wages for almost, if not quite, a year after the margin of profit (?) had ceased to be able to pay it. As a consequence of this ever growing deficiency, it was computed in the trade that the depreciation in value of mill property, taking the 'Limited Companies' only, was at the beginning of this year from 2,000,000l. to 3,000,000l. But these Companies are believed to contain not above a tenth of the whole cotton capital, which, if it has suffered in proportion, is thus about 25,000,000l. to the bad.' This then, with prices ever going down, profits rapidly disappearing, the two leading continents of the world groaning under prolonged commercial depression, rivals underselling, sources of demand drying up, customers killed off or starved off by the havoc of war or famine, was the period fixed upon by the operatives of Lancashire to refuse work, at a necessary reduction, which had indeed been due long before. Not only was India unable to purchase wearing apparel in like proportion as heretofore, owing to several successive famines, which same cause had also to a great extent stopped the demand of China, but war had deranged the markets of the Levant and of Russia. The American cotton manufacture, protected by the 'Morrill tariff' which ensured it the larger proportion of the home-market, was developing a competition, the result of which has been variously estimated, but which, owing to the reckless spirit of American trade, selling at a loss to get a footing in the market, rather than not sell at all, probably forms a serious count in the influences which disturbed Lancashire. Bombay, moreover, has since 1860 taken extensively to cotton manufactures in the coarser sorts, such as suit the simple necessities of the great bulk of the native Indians. The following table shows the gradual development of this industry there : The trade review which contains it adds, 'Most unquestionably the bulk of the out-turn has gone to supply wants that would otherwise have been met by imports from Great Britain.' We should add that all this while a protective tariff has fostered this manufacture in Bombay, by levying a duty of nominally 5 per cent. on cotton goods imported into India, but believed to be equal to 8 per cent. on Manchester prices. On March 19, however, in this year, the Indian Government announced the abolition of this duty on all coarse and heavy makes, i. e. virtually on all which the looms of Bombay are engaged in turning out. Thus in the future the Bombay and the Lancashire producer will stand on the same level, save in so far as distance from the Eastern market adds freight to the expenses of the latter. Whether the Bombay mills will be able to maintain themselves when this protection is withdrawn, is a question which time only can solve. In America the import duty levied on cotton is believed to range from 35 to 75 per cent. It is stated that in spite of this sixty-one million yards of cotton fabric were sold in the American markets by this country in 1877. The factories in the United States are often grand in structure and design, but have been built, it is believed, by a lavish outlay of capital, which would disable them from effective competition outside the States themselves, were it not for the readiness of their managers to engage in a race along the road to ruin, of course in the hopes of turning the dangerous corner in time, and striking into a career of success. Thus, the necessity of realizing, and a determination to force sales with this object, has still further gorged an already glutted market, and even after nine weeks' stoppage of production in Lancashire, prices show no sign of rallying. The efficacy of American competition has been impeached by the workmen's advocates. They say, 'England need not fear countries walled in by a protective tariff. Trades built up under such a system are incapable of a highly competitive power.' They illustrate by some American samples of excellent quality sent over in 1875, priced at Is. 3 d. to Is. 4 d. per lb., adding that Lancashire could produce as good at IS. Id. per lb. When these had been shuttlecocked about a good deal in the Manchester market, a shipping house is said at last to have introduced the bulks to which they belonged, 'without limit as to price,' and the author of the statement is confident that none of them reached Is. Id. per lb. Similarly 1 Ellison and Co.'s Annual Review, p. 4. they urge as regards finer goods, that some bleached shirting from America was offered at 64d. per yard, and that a Manchester salesman at once undertook to supply a sample to match it at 44d. per yard. In reply to these and similar statements, a letter appeared in The Times, in which the writer said : 'I am myself engaged in buying these American calicoes from the importers, with whom I am in constant and intimate intercourse, and if your correspondents (Messrs. Whalley and Birtwhistle, the weavers' secretaries) mean to say that these goods are always imported at a loss to American merchants and manufacturers, or that the trade is carried on under more unfavourable conditions than is our own export trade, I can only say that my experience does not confirm that view of the question. I can assure you that the rate of wages now paid for weaving at Fall River or Rhode Island, taking into account the reduction submitted to this month (May) without a strike, is fully 25 per cent. less than that paid in Lancashire. The question to be answered is, have the 30,000 pieces per week which have on an average been shipped from New York and Boston to this country during the last two or three years resulted in a loss . . .? and if they have, has the loss been greater than that with which our own export trade has been carried on. My own impression is, that your correspondents are greatly deceiving themselves. But perhaps they know more than I do.' Let us here just pause to estimate the rival exports of Great Britain and America, crossing each other on the Atlantic. It was said above on behalf of the operatives' view that, in spite of the heavy duties levied by the United States, sixty-one million yards were exported by us thither in 1877. The estimate in the above letter of 30,000 pieces per week' imported by us from thence per contra, if those pieces were of the dimensions given above, 38 yards each, would amount to over 60,000,000 yards. Thus the rival exports on this computation closely balance each other. It should be noticed that it is the operatives who slight the efficacy of American competition; the mill-owners take a very different view, and are convinced of its formidable character. Which is most likely to be right? Rejecting, however, the masters' proposal, the operatives had suggestions of their own, the principal one being to combine the proposed reduction with 'short time.' They said, 'Run the mills four days a week with 10 per cent. off wages, or five days with 5 per cent. off, or full time with present rates.' The resource of working short time is already by experience familiar to Lancashire, and the fact that it is regarded as a reasonable expedient seems to argue an unsoundness in the |