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4. Throughout our tour we found a keen interest in our mission both in official circles and among persons engaged in industry. In the course of our inquiry we interviewed employers, representatives of workpeople, (trade union officials and others), and workpeople themselves. We also visited the dwellings of workpeople. Some of our number attended the Annual Congress of Trade Unions for Canada held at Montreal, the Annual Convention of the American Federation of Labour at Detroit, the Annual Convention of the American Management Association at Chicago, a meeting of the Special Conference Committee of Employers at New York, and other similar organisations. Before proceeding on our mission, and after our return we visited several establishments in England.

5. All whom we were privileged to meet spared no pains to assist us in our investigations, and we desire to place on record our deep appreciation of the kindness, hospitality, and assistance they afforded to us throughout our visit. We also desire to record the readiness with which employers and workpeople were prepared to supply us with information and the open hearted way in which we were received.

6. We were appointed primarily to study industrial relations and the conditions in industrial establishments. Our Report is therefore mainly concerned with these matters rather than with commercial and business conditions, but we have felt bound to refer to certain aspects of American business which have a direct bearing upon the subject and ought not to be left out of consideration.

PART I.-INDUSTRIAL CONDITIONS IN THE

UNITED STATES.

7. Industrial conditions and the relations between workpeople and their employers in the North American Continent or in any country can be fully appreciated only if they are considered in conjunction with the general background of the corporate life of the nation. That background is created out of a combination of factors, physical, historical, economic, and racial. These factors are so different in North America from those to which we in Great Britain are accustomed that although they have operated on people having similar characteristics and motives the resulting position is in many respects dissimilar.

Economic Conditions.

8. The United States is a vast continent three million square miles in extent, spreading over nearly 20 degrees of latitude. and nearly 60 degrees of longitude. She has within these limits wide ranges of climate, many varieties of agricultural produce sufficient for her own needs, and supplies of raw materials for her manufacturing industries. The importance of agriculture

in the economic structure of the United States cannot be overrated. According to the the 1920 census the agricultural population was about one-third of the total population. Fundamentally the economic wealth of the United States and her continued prosperity as a whole depend on the product of the land. The value of exports of manufactured goods is small in relation to the total value of production, and the success of manufacturing enterprise depends largely upon the consuming power of a great domestic market, which is estimated, on the basis of the 1920 census, to be about 116 million persons, increasing each year by about one and a half millions. Manufacturers are assisted in the development of this market by complete freedom from tariff restrictions within the union of 48 States and by protection against competition from outside, by a strong tariff machine which is capable of easy and rapid adjustment to meet changing circumstances. The domestic market consists of a people having one currency, one standard language, similar political and legal institutions, and a reasonably uniform standard of life.

now

9. The United States is a great economic unit of states more comparable in size and structure with a united Europe or a British Empire free from tariff barriers and having a customs union. She is able to organise and budget production in relation to her own domestic market and to create and control demand to a much greater extent than is possible in Great Britain. Her population per square mile is about one-tenth of that of Great Britain, and the resources are such as to provide for a much larger population than she has at present. The agricultural development of Great Britain is totally inadequate for our domestic needs, and so far from being self-sufficing we support our population by our capacity to sell our services, produce coal, and manufacture goods at a world price.

10. The industrial development of the United States is comparatively recent; indeed, it was not until 1920 that the number of persons gainfully employed in manufacturing exceeded the number of those employed in agriculture. This industrial development has taken place moreover during an era of great technical progress and expansion.

11. These, then, are the dominant factors which would at any time make for potential prosperity in a country which is young, enterprising and abundantly supplied with natural resources. They have made it possible for capital to be invested in industrial enterprises with confidence and for the material standard of life to reach a higher level.

Recent prosperity.

12. Since 1922 the United States has enjoyed an unusually high degree of prosperity except for a short set-back in 1924. This prosperity is evidenced by the improved standard of living,

and by the increase in the deposits of savings banks; in the assets of building and loan associations; in business profits and savings; in insurance and banking business and other financial activity; in imports; and in investments abroad. Special importance attaches to this period and, in the developments which have taken place, the economic position of the United States has been a very important factor.

13. There is no doubt that in the first place the policy favoured and actually put into operation by employers for the purpose of recovering from the depression of trade in 1921 was a general reduction of wages. Wherever organisation of the workers was strong, this was strenuously resisted and with considerable success, notably in the mining, printing and building industries. The resistance to the policy of wage reduction as an item in deflation was sufficiently great to enable other counsels to receive consideration, and to bring to the front the fact that, in the special economic position of the United States, such a policy in industry would react seriously upon agriculture, and upon manufacture for the domestic market. The policy changed to the reduction of costs other than by further wages reductions, and there was a concentration on increasing productivity and reducing costs, and a general increase of efficiency which, with the maintenance of the purchasing power of the people at the highest level, has had a far-reaching effect on American industry generally.

14. The war gave an impetus to the expansion of manufacture in all branches of industry and left the United States a creditor nation in relation to Europe. Since 1922 there has been a rapid increase in the volume of manufacture in most branches of industry. The main activities to which the increased volume of production may be attributed have been building and constructional work, the development of the automobile industry, an extensive programme of railroad rehabilitation and a development in all branches of electrical manufacture. It is estimated that about two and a half million workers are employed in the actual erection of buildings and another two millions in the production of materials for constructional work. The automobile industry is estimated to give employment directly and indirectly to about three and a half million workers. The rapid growth of this industry is shown by the fact that in 1925 the United States produced 87.5 per cent. of the world's output of automobiles and that the number of automobiles in use in the United States has increased from 9,231,000 in 1920, to 19,954,000 in 1925. The introduction of the automobile has affected the whole development of the country and has caused an immense expansion in road making and building. The activity of these industries, the large sums of money spent in renovating and improving railroad stock, and the great electrical development have benefited many other industries including iron and steel, and engineering.

15. The domestic market for an increasing number and range of articles has been stimulated and widened by the system of instalment buying which has become a marked feature of American life among all classes. Instalment buying has been a common practice in the United States for the past 50 years, but it has extended rapidly in the years 1920 to 1926 both in volume and in the number of industries affected. A report published in January, 1927, by the American Academy of Political and Social Science shows that, exclusive of houses, life insurance and stocks and bonds, all of which are sold on instalments on an extensive scale, about 15 per cent. of retail sales are made on this system, or goods to the value of approximately six thousand million dollars (about 1,200 million pounds). It is further estimated that the instalment debt outstanding at a given time is two and three-quarter thousand million dollars (about 550 million pounds)

16. It is not possible to say by how much instalment buying has added to the internal trade of the country, but the addition must be considerable. Automobiles account for about one and a half thousand million dollars of the instalment debt or more than all the other commodities put together. It is estimated that approximately 75 per cent. of automobiles are sold on the instalment plan. Other commodities sold on time payments

in order of importance are :

Household furniture, phonographs, washing machines, vacuum cleaners, jewellery, pianos, sewing machines, wireless apparatus and electrical refrigerators.

Clothing is sold on deferred payments, but since the term of payments is comparatively short, the amount of credit outstanding at one time is only about forty million dollars.

All the indications go to show that instalment buying is still on the increase. The great growth since 1920 has taken place during a period of prosperity with money plentiful and the rate of interest low. There has been during the same period an increase in savings deposits and in all forms of investment.

17. Since the war Prohibition of the manufacture and sale of alcoholic liquor has become the general law of the land; its economic effect has been very great by the diversion of large sums of money into savings and the purchase of commodities, and by increasing regularity of attendance at work.

18. A fairly high level of business activity has thus in general been maintained and the industries we have mentioned are prosperous. The United States contains within itself all the elements of competition and other adverse circumstances which affect industries in foreign countries competing in open markets, and certain sections have not been able to maintain the general level. Low prices prevailed last year (1926) in certain branches of agriculture. In the cotton industry new well-equipped and

well-managed mills in the South, utilising white labour from the hills with longer working hours, are in keen competition with the North. The number of spindles North and South is now about equal but the Southern Mills are in general on full-time and run each spindle on the average about 50 per cent. more hours than the Northern Mills. There is thus unemployment and short time in the North. The boot and shoe industry and the clothing industry are also unsettled, the basic trouble being that productive capacity is ahead of demand. Here also there is much unemployment and short time. In his report for 1925 the Secretary of Labour stated that 14.5 per cent. of the boot and shoe factories employing 60 per cent. of the wage earners in the industry produce 65.6 per cent. of the total output. These factories could with steady work for 300 days per year produce all the boots and shoes needed. A somewhat similar position exists in the coal industry where producing capacity exceeds demand. During our visit coal mining was enjoying a period of prosperity due to the coal stoppage in Great Britain. Prior to the stoppage prices were low in the bituminous coal fields, and competition was keen. The current agreement with the United Mine Workers of America, known as the "Jacksonville Agreement," which terminates in April, 1927, fixed a datal rate of $7.50. Some of the coal owners who were parties to the agreement decided that they were unable to operate the unionised mines successfully at the scale of wages provided by the agreement. They accordingly paid wages below the agreed scale. Many of the unionised mines were idle. The wages in the non-union mines were definitely below the union rate. Because of the coal stoppage in Great Britain and an increased domestic demand, prices rose and wages were raised in the non-union mines until, late in the summer, they reached the union level or above it.

Racial differences.

19. Industrial conditions in the United States have been profoundly affected by the composition of the population. No country has received so many immigrants, and much of the immigration has been so recent and has been made up of such diverse peoples that the situation is very far removed from the homogeneity which characterises the population of Great Britain.

20. In each year from 1896 there was a larger number of immigrants from Southern and Eastern Europe than from Northern and Western Europe. Between 1905 and 1914, the immigration was in an overwhelming proportion from Italy, Austria-Hungary and Russia. There was also emigration, amounting to about onethird of the immigration, and on the whole there were more emigrants of the Southern and Eastern races than of the Northern and Western races. In each year from 1905 to 1914 the total number of immigrants from all sources was never below

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