to such reduction, and is based on financial data which will render any lowering of rates most improbable-particularly in view of the fact that the railroad labor vote in support of the measure was secured by promises of better wages and shorter hours. They had much to say of the administrative economy which would result from the substitution of a single state system for the separate offices of the several companies; but when the cities where the separate offices were situated looked askance on a measure which would deprive them of this importance, the pretense of economy was cast aside for the sake of gaining votes, and arrangements were made for six general offices instead of five as at present. It was on grounds of political theory that the question was decided. The socialists voted for the measure because they thought the state should take the place of all private capital; the radicals voted for it because they thought the state should take the place of that particular form of private capital. The two parties together were strong enough to constitute a majority; a division of opinion among the members of other parties made that majority overwhelming. The charter conditions are such that, for four of the five main systems, state purchase will go into effect in 1903; for the St. Gothard it will come in 1909. It will thus be at least five years before the economic difficulties of the project, which have been so far ignored in the discussion, make themselves manifest in practice. First will come the financial ones. The plan as adopted contemplates purchasing the railroads at a very cheap rate; and a great deal of the popularity of the plan depends upon this compulsory cheapness, by which the state can drive a hard bargain with the capitalists. The charters of the Swiss railroads provide that, in compulsory purchase, the state must pay the company, on the one hand, not less than twenty-five times the average net income for the fifteen years preceding the date of purchase; and on the other hand, that the state must not pay less than the actual cost incurred in building the road. The companies thus had a double safeguard; and when state purchase was proposed in 1883, it was rejected as too expensive. But since that time, the authorities have been busy making laws as to railroad accounts which define "net

income" and "actual cost" in a manner most unfavorable to the companies; while they intend to make the most of the clause which provides that the property must be delivered to the state in "a perfectly satisfactory condition." They thus propose to buy the stock of four of the companies at about two-thirds of its market value prior to this agitation for state ownership; they calculate to raise money for the purchase by the issue of 31⁄2 per cent. bonds; and they expect in this way so to reduce fixed charges as to make up for the burden involved in the assumption of the relatively unprofitable St. Gothard road.

It is needless to say that expropriation on these terms will be contested in the courts. If the courts decide against the government, the operation will be much more costly than is expected. If they decide in favor of the government, we do not think that money for the transaction can be borrowed at 32 per cent. The decision will create a prejudice among foreign investors, and the disposable home capital in Switzerland is not very large. The financial burdens are thus, in any event, likely to be heavier than the estimate.

Meantime, industrial difficulties will make themselves felt. If the financial burdens continue, the expectations of higher wages and lower rates will be difficult to fulfill. In the efforts of the authorities to satisfy the immediate demands of all parties it is not unlikely that they will repeat the experience of northern Italy twenty years ago, and economize on maintenance accounts until both track and rolling stock are quite inadequate; nor is it altogether unlikely that in Switzerland, as in Italy, this inadequacy of government management will produce a reaction which may result in establishing the private companies more firmly than ever.

THE PRESENT STATUS OF COTTON AND COTTON MANUFACTURING IN THE UNITED STATES.

I

HAVE been requested by the Editors of the YALE REVIEW to prepare an article on the existing conditions of the cotton manufacture. I could only agree to put into a little different form the substance of several treatises which I have already published. I shall also be obliged to speak in the first person. I may do this without assumption, as I believe my treatise on "Cheap Cotton by Free Labor," published in 1861, was the first one in which the system of slave labor was dealt with purely from the economic standpoint and utterly condemned.

I may venture to suggest to the students of Yale University, many of whom will hereafter be occupied in what is called practical life, that it will be greatly to their advantage and possibly to their profit if they will investigate each material subject with which they may be called upon to deal on every line which is open to them. When I first became occupied in the conversion of the cotton fibre into fabrics, I sought to trace the history of the cotton fibre from its origin in prehistoric times down to the present. I found that as I held one end of the strand of twisted cotton, the other had been held by some prehistoric woman in far-away India, who gathering the fibre of cotton from the boll, twisted it in her fingers and doubling the strand by holding it with the teeth, may have made the first strong cord. As I followed this strand down through the ages I found in its convolutions the whole of human history, much of it yet unwritten for the reason that the true history of commerce and its influence upon the present condition of the world yet remains to be written. Witness the fact that the wars of religion, the wars of dynasties, the wars of classes and the wars of creeds have merged into wars or threats of war for the control of commerce.

There are some persons, even Senators of the United States, who regard international commerce as a state of passive war,

looking upon the import of any goods which could under any circumstances be made in this country, even at a higher cost than they can be made for elsewhere, as an attack upon domestic industry which must be repelled by the force of what has been called protection with incidental revenue. This onesided and superficial view is held by those who give no regard to the fact that commerce is an exchange of products for mutual benefit, and that when through the export of what we do not need we obtain goods at a lessened cost which we do need, both nations are benefited. Yet through the force of circumstances rather than by the exercise of any reasoning power, this mediaval conception of commerce as a condition of industrial war is intellectually dead.

There are many signs that the effort to establish what is called "protection with incidental revenue" has at length drawn public attention to the fallacy of the system of privation which has so long been masked under this phrase. The home market of this country has been extended by sales of goods for export at the rate of one hundred million dollars worth per month for the past year. These goods consist not only of the crude products of the field, the mine and the forest, but of the finished. products of the workshop and the factory, from which the highest rates of wages earned in this or any other country are derived. The foreign markets in which these goods are consumed are mainly in the machine-using or manufacturing states of Europe, where wages are lower than our own, but much higher than in other countries or continents. The United Kingdom of Great Britain and Ireland with the British Colonies buy in our home market at our seaports more than sixty per cent. of the excess of our farms and of our workshops. France and Germany, high protection states, with Belgium and Holland, whose tariff taxes are on a revenue basis, take more than twenty per cent., while the non-machine-using nations are able to buy from us less than twenty per cent. of what we sell. Yet these non-machine-using nations of Asia, Africa, South America and Oceanica are among the largest buyers of the maunfactures of Europe, while we complain of our limited market among them. We have been scared by the phantom

of "pauper labor," failing until now to realize that low-priced or pauper labor is very costly and that high wages earned by intelligent and skilled workmen are the complement of low cost of production. As this economic principle becomes a part of the common knowledge or common sense of the community, the dread of pauper labor becomes humiliating. So long as the domestic consumption of our own country extended so rapidly that we had but little to spare, the delusion prevailed among ourselves which governed the English mind until 1842, when under the lead of Sir Robert Peel she opened the door to the trade of the world and made her ports the centers of the World's great commerce. It has not been difficult to mislead the community by men themselves misled, who like the Senators from Massachusetts regard international commerce as a war on domestic industry.

But under existing conditions it will soon be impossible for men, even of great ability in the legal or other professions, to maintain a mere party policy of protection by which the country is deprived of its rightful position in the commerce of nations in which we are now entitled to the paramount position. The unfortunate war in which we are now engaged has brought purely revenue taxes into force, which added to the previous revenue taxes on liquors, tobacco and sugar will suffice to meet all the normal expenditures in time of peace. These taxes will stay because they are consistent with the simple principle of right, namely: all taxes that the people pay the government should receive. The tariff taxes will be abated which the people now pay but which the government does not receive under the policy of protection with incidental revenue. The country is now waiting for the true economic leader who will surmount partizan dictation and do the great work for the country which Sir Robert Peel did for England. When this is done the commercial re-union of the English-speaking people will be accomplished.

Peace, order, industry and free commerce will then be assured, if for no other reason, yet because the debt and army-burdened states of continental Europe will be wholly incapable of any extensive competition in the arts of peace.