LABOR CRISES AND THEIR PERIODS IN THE UNITED STATES.

THE

HE quantitative study of labor questions is a comparatively new department of economic science. Most of the literature with regard to the subject has either confined itself to generalities, or it has been of the anecdotal or biographical character. We have had interesting accounts of the various movements of the century in which the feelings and aims of the chief actors have played a prominent part, but little effort has thus far been made to reduce these movements to any law or to get really scientific generalizations which shall be as distinct from the personality of the persons concerned as the scientific generalizations of medical men are distinct from the sufferings, the hopes, the bereavements of their patients. This article is an attempt to frame some generalizations with regard to one particular phase of the labor movement. It is based upon material covering but a limited field and a limited period. Its conclusions do not, therefore, claim to be more than tentative. Later investigations are quite likely to modify them in many particulars. The author believes, however, that the method which he follows is sufficiently promising to be worth trying, even with scanty statistical material.

It would be desirable to extend this investigation to other countries besides the United States, but a brief survey of what has been done abroad will show at once the insufficiency of our data.

In 1880 Mr. Bevan read an excellent paper before the Royal Statistical Society on the strikes of the previous ten years, but it is significant that he felt called upon to apologize for taking up the time of the Society with such an uninteresting subject. That his apology was not superfluous may be inferred from the fact that from that time to the present he has found no imitators in the Society, and that strike statistics are barely alluded to in its publications. It is to be regretted that Mr. Bevan did not continue his investigations so as to connect with

those of the English Department of Labor, which did not begin until 1888, for then we might have a series of figures for England extending over a quarter of a century. The French Department of Statistics has published figures running back to 1856, but for all of the earlier years these statistics are obviously ex post facto and cannot be relied upon. The Prussian government undertook such an investigation in 1864, when the question of repealing the law against combinations arose, and it published figures covering nineteen years.1 But how valuable these figures are may be judged from the fact that only fortyfour labor disturbances were enumerated in nineteen years. It was not until 1890 that the Imperial Department of Labor undertook to keep contemporaneous and careful records of strikes.

The result is that the figures published by our Federal Department of Labor in its Reports of 1887 and 1896, which together cover the years 1881-1894, are the most complete figures that we have dealing with this subject in any country.

And yet these disturbances are of sufficient magnitude to warrant us in giving them as close and painstaking a study as has been given to commercial crises.

During the thirteen and one-half years for which our Federal Department of Labor furnishes exact statistics, the loss of wages alone to wage-earners through strikes and lockouts was $190,000,000, or an average of $14,000,000 a year. The loss to employers was estimated at $94,000,000, or an average of about $7,000,000 a year, and these figures do not include the incidental losses due to violence, destruction of property, additional police expense, cost of militia, legal expenses, etc. That these are considerable may be seen from the fact that the Chicago strike of 1894 cost the railroad companies in destruction of property $685,308, and in loss of earnings $4,672,916. In addition to this, the community was put to the expense of arresting over five hundred persons, and imprisoning many of them, and of supporting the State militia and extra police in order to maintain the peace, to say nothing of the loss of twelve human lives during the disturbance. The net loss caused by

1 Oldenburg, in Schmoller's Jahrbücher for 1886, No. 1.

commercial failures in the one year 1894, i. e., the excess of liabilities over assets, was about $57,000,000, so that the average annual loss during thirteen and one-half years directly attributable to strikes and lockouts was more than a third of the loss due to commercial failures in what was a fairly normal year. If we compare with this the actual loss in that same year through strikes and lockouts, it was $28,600,000 in the first six months alone, or considerably more than half the loss due to commercial failures in the whole year. It is quite obvious therefore that we have in labor disturbances a very serious source of industrial loss, even compared with that which comes from commercial failures.

We also have a disturbance of industrial activity which, in proportion to those working for wages in the industries concerned, is even greater than the proportion of commercial failures to those engaged in business. It is, of course, difficult to make an exact comparison between things which are so different, but it is not uninstructive to state that in 1894 the number of those who failed in business represented 1.2% of those who were engaged in business. If we take the number of persons working for wages in industrial pursuits in 1890 as roughly representing the average for the eight years, 1886-1894, we can set down the number as about 5,000,000. This number includes those given by the census as working for wages for railroads and manufacturing establishments, who may be taken to roughly represent the class subject to strikes and lockouts. The number of those striking in 1886 was 508,000, and in the first half of 1894, 482,000. In the former year, therefore, probably more than one-tenth, in the first half of 1894 alone somewhat less than one-tenth of the possible strikers were engaged in some kind of a disturbance. These figures, rough and approximate as they are, bring out two things very clearly; first, that labor disturbances occasion a very serious loss even compared with commercial failures; and secondly, that in proportion to the number of possible sufferers, they reach a much larger percentage than is reached by commercial failures.

Let us now consider what I shall call the labor crisis, and ask if we can establish any such sequence of cause and effect or

any such regularity as to enable us to lay down a law of labor crises, first, however, referring briefly by way of introduction to its prototype in the commercial world.

For nearly two centuries the commercial world has been familiar with the recurrence from time to time of certain disturbances known as commercial crises. The acute stage of such a crisis is often called a panic. When they first occurred, as in the case of the South Sea Bubble in 1720, and the collapse of the system of Law in the same year, they were extremely severe and regarded as altogether exceptional. But just as comets were in the early days thought to be special signs set in the heavens in order to warn mankind of impending events, but were afterwards discovered to have an orbit similar to that of the planets, excepting that their periods were longer, so commercial crises have been found during the present century to recur with a certain amount of regularity. Few of them are probably as severe as the first ones that occurred, but they are more systematic. They have passed from the acute stage to the chronic, and while they do not recur as regularly as the annual disturbances caused by the gathering of the crops or the periodic stoppage of trades working by the season, there is a certain rough rhythm in their recurrence, if we consider sufficiently long periods. The simile which I have just borrowed from astronomy is not as far fetched as it might at first sight appear, for an eminent economist has brought our commercial crises into a direct causal relation with astronomic phenomena. I refer to the well known sun-spot theory of Jevons, who found that the periods of commercial crises correspond very closely with the sun-spot periods, and who held that the sun-spots indirectly caused the crises by affecting the meteorology of the earth and therefore the crops, and thus causing disturbances in one of the most important branches of production throughout the world. Few people hold this theory now, but the periodicity is recognized, and economists are pretty well agreed upon the general phenomena of the cycle through which trade passes.

A characteristic feature of the commercial crisis is the breakdown of the machinery of credit which in normal times

keeps the different departments of production in harmony with each other. We find classes of people anxious to produce and anxious to exchange their products for the products of other people; on the other hand, we find people anxious to produce what the first set wish to consume and to consume what the first set wish to produce, but there is no exchange because the machinery of exchange has ceased to operate. The middlemen are afraid to buy the products of each for fear they will not be able to sell them. The condition is like that of two towns connected by a highway which is temporarily washed away by a flood. Both suffer for the lack of means of exchange.

In such a crisis the lines of cleavage are vertical; one producing group is separated from another producing group. But within each of these groups there are horizontal lines of division which separate the employer or manager from the wagereceiver, and bring about what is popularly, though fallaciously, called the contest between capital and labor. The peculiarity of the wage contract is, as Prof. Clark puts it, that the employer buys out his partners. He agrees to pay certain wages on the expectation, which is not always realized, that he will be able, from the selling price of the goods or services produced, to make up what he has advanced and something more which he retains as his profit and as the remuneration for his own work of management and risk. If he is disappointed in his expectations, he must do one of two things, either stop producing, or resort to some method of diminishing the cost of production, such as cutting wages, increasing the hours, economizing the use of labor or material, or introducing new methods. This process almost always involves an injury to the wage-receivers. If they refuse to accept his efforts at economy, they go on strike, and the enterprize is stopped altogether. If strikes become general, we have a condition of things similar to that which exists in a commercial crisis, namely, a group of people anxious to render services in return for wages, and another group of people anxious to obtain those services and pay for them, but a failure to make the exchange on account of the difficulty of agreeing upon the terms. In its acute stage this condition of things may assume the features of a panic, when laborers strike or employers estab