$941,500. Whilst depositors in these banks need not necessarily be trade union members, this growth in numbers and in assets proves that American wage-earners have a large margin for savings and investment.

But the most significant aspect of the high wages of America is their connection with increased purchasing power. The American employer, envisaging a vast country where wealth is fairly evenly diffused and where there is no one wealthy class, quickly realises that his customers must be found among the great bulk of the people, and that whatever reduces their purchasing power will reduce his sales. This conclusion is widely accepted. It led the employers in the period of depression to hold their hands in respect of wage reductions. Whereas English and Scottish employers enforced reductions of from 30 to 50 per cent. and have not restored wages in any but isolated instances, American employers cut wages by an average of only 20 per cent., the greater proportion of which was restored in less than two years. Moreover, when a noticeable recession of business activity occurred in 1924, wage scales were not reduced, the bad trade manifesting itself in a reduction of the working week by an average of about three hours. Mention of this fact recalls an observation made by Professor Carver that the American worker has so far preferred more goods to more leisure. An insatiable standard of life calls for greater purchasing power, and leisure has hitherto seemed contradictory to the high earnings which maintain this standard. Mr. Henry Ford has, however, suggested that leisure will help the standard of life, and reflect itself in production. It will increase the wants of men and their demands will speed up industry. It is on this principle that he has reduced the working week in his factories to forty hours, and is giving two free days a week to 217,000 employees.

The American wage position is clear. American workers earn high wages. They prefer high earnings to shorter hours. Goods are more important to them than leisure. They use leisure well, evening schools being abundant and full, and public libraries large and well patronised. But life is labour, and toil is a part of the fun and a pre-requisite to the enjoyment of life. Their employers find in high wages one of the supports of good trade. They approach reluctantly any situation which calls for a reduction in wages. They prefer to find other methods of keeping costs

low. Unless they seek these, they know that they will drift into the brutal and stupid cycle of wage-reduction after wagereduction. Strengthened by this saner economic philosophy and supported therein by their workers, they have devoted themselves to exploring the way out from the impasse into which English manufacturers have been driven.

Three roads have led them into the fields of prosperity. In a literal sense, they have followed the path of power. Labour has always been relatively scarcer in America than in older countries, and mechanical aids have been used more widely and more effectively. The post-war restriction of immigration has intensified the labour difficulty and made mechanical aids more necessary. Bald statistics, culled from the admirable Federal Census of Manufactures, 1923, indicate an increase during the previous decade of 33 per cent. in the productivity per employee in American industry, simultaneously with an increase in primary horse-power per wage earner of 16 per cent. The absolute advance in the total quantity of horse-power utilised has been greater. In the last quarter of a century horse-power has trebled; since 1914 it has almost doubled. The American employee has at least twice the mechanical equipment at his disposal which an English workman has. In consequence, workmen are never employed to push or carry goods round a factory in the course of manufacture. Conveyors of all types and in all desirable spots replace human effort and save time and energy.

This extension of mechanical power is helped forward in two ways, one of which will be described later. The Americans are themselves an ingenious people. They are inventive and endowed with a good deal of mechanical sense. They envisage possibilities and then proceed to realise them. They lie awake at night dreaming of a machine that will increase production in some desired way; or, if their nerves are out of order, start up in a nightmare, in which they see their competitors with another that will close a large part of their factories. I have questioned machine designers and machine tool builders whether human ingenuity would remain equal to the demands made upon it, and have been confidently reassured upon the point. Machine designing was but adding two and two in a straight line and getting exactly four. Moreover, great results are often attained simply. In one factory, a hand process previously requiring over

180 girls is now done by what looks a simple but ingenious machine. In the same place, a machine was found to be wasting 40 per cent. of its time! There ought to be no rest-pauses in the activity of a machine! A simple attachment removed the defect and that machine is now 98 per cent. effective. On the other hand, I met a production manager who wanted to increase his output five-fold, and was told that such an increase was mechanically impossible. He had most probably heard of Mr. Henry Ford's dictum that the technician " always knows far too many things that can't be done," and refused to accept the objection. Nevertheless, there was a note of resignation in his statement that he had actually succeeded in getting four and a half times his previous output.

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The duty of securing the increasing prosperity of American industry falls primarily upon that class collectively known as management." Mr. Henry Ford declares bluntly that "the only way to get a low-cost product is to pay a high price for a high grade of human service, and to see to it through management that you get that service." In his announcement of the 40-hour week he states his expectation that "management, with the aid of machinery, will find a way of getting more work done in five days than is now done in six." Again and again, in conversations with managers of American businesses, I was told of the strain which fierce competition and the need for reduced costs put upon their ingenuity, resourcefulness, powers of organization and capacity for leadership. From one of the pioneers in the movement for efficient management I learnt of the importance attached to scientific objective examination of all the difficulties that arise in industrial administration; from another, of the need for forms of administration that are simple and work smoothly. The American manager thinks much upon the theory and the practice alike of his art. But on all hands I found management credited with the remarkable achievement of the last few years. The Vicechairman of the National Industrial Conference Board, an association of American employers, in some respects analogous to the Federation of British Industries, after ascribing the increase in American industry before the end of the war to the fuller application of power and machinery, credited the greater productivity of the last few years to " the increased efficiency of management.'

It is significant, moreover, that this type of management is less

costly and less cumbersome. "Better management is cheaper management." Striking evidence of this is furnished by the authority just quoted, who writes :

In 1923, which was a year of even higher manufacturing activity than 1919, it required 25 per cent. fewer workers, 13 per cent. less power, and 18 per cent. less management personnel to turn out each unit of industrial production than before the war.

The third road followed by American industry is that of cooperation. Managers have ceased to blame the workers for their own ineptitude, and have faced up to their own defects and inefficiency. They have cultivated the team spirit within the industrial organization, partly by an objective analysis of the aim and purpose of the organization, partly by dismissing those who will not "play the game"; but chiefly by formulating schemes of administration that are simple and-given good-will-can be counted on to work smoothly. Further, they realise the need for securing the co-operation of their employees. Whatever their views on unionism, they have no class antagonism towards their "help.” If, as in the clothing and some of the constructional trades, or on a few of the railroads, they have arrangements with trade unions, they carry these out with a completeness and a degree of success seldom achieved by even the most progressive firms in Great Britain. The men's clothing trade in Chicago, Cleveland and Rochester, and a portion of the women's garment trade, are regulated by definite agreements which embrace a wide area of co-operation. Where employers run open" shops, especially when they have changed over from union shops, they show an equally keen, though less definitely organized, appreciation of their mutuality of interests with their workers.

Labour responds heartily to this co-operative attitude. American labour is emancipated from the class-consciousness which shackles British industry. It has a sense of economic forces and economic values. It appreciates effort and ability and does not begrudge them their reward. The worker of to-day may be the employer of five years hence. He can rise only if he saves out of high wages, then risks his capital in a small way. Having become a capitalist, he can grow only by making profits, saving them and investing them in plant and machinery, thereby employing more workers. To the American workman, this is not economic theory, as from a Workers' Education Association

lecturer, but an epitome of the life of many of his friends, and a plan of his own hopes.

To carry out this plan, he will work machines to the full, and will complain if his time is wasted or his labour made ineffective. His organizations do not differ from himself. American trade unions give little quarter to Communists, who are ever a destructive element. The two most recent prolonged disputes—the textile strike at Passaic, N.Y., and that of the garment workers in New York City-were described to me by trade union leaders as unquestionably the work of Communists. The "strike weapon" is a weapon of last resort, not an instrument of terror everlastingly being whirled in the air to distract a nation. American trade union leaders have launched a campaign for cooperation. Mr. William Green, Mr. Gompers' successor as President of the American Federation of Labour, came into the high temple of American scientific management, the Taylor Society, a year ago, and astonished the American business world by an utterance sustained throughout on a basis of economic common sense. Two sentences from one of his subsequent statements will show how level-headed is this new attitude of American labour :

Between capital and labour there is an inter-dependence so fixed and irrevocable as to make complete success attainable only through understanding and co-operation. . . . This newer concept of modern Trade Unionism is that the antagonistic and hostile attitude so characteristic of the old order must be supplanted by a friendly relation and a sense of obligation and responsibility.

Is there not in these two sentences, taken in all their implications, a great deal that explains the difference between the abounding prosperity of America and the economic doldrums of Great Britain ?

An instance of this co-operation is to be found on the Baltimore and Ohio Railroad. Five years ago, before the disastrous railway strike of 1922, seven craft unions, whose members were in the employ of this railroad, had been pressing for an opportunity of practising an effective co-operation. In February, 1923, their proposals were accepted, and they began their experiment at the Glenwood repair shops, situated in Pittsburg, where 300 craftsmen were employed. These shops were selected by the management and were described by the unions as the establishment where " at