schools have not had much to do with the forming of the staff of English factories, but if the secure possession of the world's trade is a proof of the superior quality of the goods, then no one can deny that skill is inherent there which we do not possess.'

Let us now summarise Mr. Schoenhof's somewhat optimistic views. High wages cheapen production in two ways. They make the labourer more efficient- he is stronger, more capable, more alert, and consequently the product of his labour is greater, increasing proportionately faster than the rise in wages. They also provoke, and indeed necessitate, a constant growth in the productive power of machinery, and give the maximum of stimulus to the inventiveness of its makers. Short hours of labour produce similar results, for employer and employed are under every inducement to greater application on the one side and economies on the other, lest the volume of production should be lessened. And in proportion as wages rise, so does the demand for the products of industry rise also; for the working classi.e. the great majority of consumers-are able to purchase more. What, then, is needed in the present and the future? More light and air for production; the abolition of all restraints, protective or otherwise, upon exchange of commodities; the increase of competition everywhere. At the same time, no agency should be neglected which will help to increase the labourer's efficiency. His home, his food, his surroundings should be jealously guarded; art schools, museums, libraries, all that goes to improve his mind, should be provided without stint. Rarely, perhaps, has economic wisdom been more justified of her children. The teaching of Adam Smith, with his powerful plea for the abolition of all obstacles to freedom of production and exchange, no less than his reserves in favour of what may be termed 'educational interference,' is recalled to the mind by every page of Mr. Schoenhof's book. It is only right to add that our author is at times haunted by the spread of over-population. It is the corpse at the industrial banquet. The chapters in which he endeavours to deal with this difficulty are among the weakest in the book, and the strength of their assertion impresses us rather as the language of a man who talks loud in order to encourage himself. He applies to agriculture, in some detail, the principles which he sees triumphant in manufacture. Profoundly impressed by the results of the application of science to the cultivation of the soil in the past, he is sanguine of its effects in the future. He takes no account of the inexorable law of diminishing returns,

and the possibility-nay, the certainty-that the fruits of labour and of capital applied to the earth will show a great falling off in the near future. We may safely, he thinks, relegate the food question to future generations; the source of poverty is not to be found in increasing populations, but in the imperfect organisation of the machinery of distribution of the products of toil and service. Is there not a trace here of the policy of the ostrich, and do not the words recall the type of reasoning which was popular at the end of the last century, and which in practice produced such disastrous results?

Whilst Mr. Schoenhof writes throughout as a practical man of business, Dr. Brentano, as befits a professor, takes a somewhat more philosophical view of the situation. For him, too, high wages are bound up with a low cost of production, and he has his own explanation of the fact. The history of the working class-and the same is true of mankind at large-shows an ever-growing range of wants. Not merely do men require a greater amount of the same commodity to satisfy themselves as time goes on, but they crave also a greater variety. The simple diet and clothing of previous generations are no longer sufficient for the modern workman, from whom so much more is required, and not only so, but he has now a whole group of mental requirements, an appetite for knowledge, and a consequent desire for the means of satisfying it, and he has a passion for locomotion and for change which is common to all classes. In short, every year finds him with a wider range of wants. Hence he requires two things-higher wages and shorter hours. How are these requirements, at first sight mutually exclusive, to be met? Clearly, if shorter hours stood alone, smaller wages would be earned, and if higher wages caused no compensating increase of product, the profits of employers would be reduced to a point at which employment itself would become less. The only means of satisfying both demands lies in improving the quality of his labour. The workman is urged by the pressure of his own ambitions to make himself more efficient, and to apply himself more thoroughly in order that to borrow a phrase from another science-what his labour loses in extension it may gain in intensity. In proportion as he does so, his labour becomes. more valuable, he earns higher wages; or, which is the same thing, he works shorter hours at the same wages. No doubt in practice the two often appear as rival interests. Adam Smith points out that the desire of the labourer to

improve his position may lead him to excessive exertion, with a consequent loss of strength; and in the same sense a modern shipbuilder says 'overtime is the curse of the trade.' But, granted that a sound intelligence directs his actions, the modern labourer will enjoy the advantage of a shorter working day without any reduction in his earnings and without any loss to his employer. The evidence that this has been the case of late years is very strong. Here, for instance, we have the experience of a large engineering firm in the North of England. The shortening of hours has 'reduced, and not increased, the cost of production; it ' has given us a more intelligent set of labourers, and given 'rise to many incidental economies. On the men themselves the effect has been great. They do more work, and they 'do better work; they spend most of their evenings, especially the younger generation, in attendance at technical 'classes.' In the same sense a large firm of chemical manufacturers report that they have never seen any reason to regret the shortening of hours, whilst to the men it has been the greatest boon-improving their health, decreasing drunkenness, and reducing to a minimum the necessity for police interference.

But in sketching broadly the results which might be expected to follow from higher wages and shortened hours, we must draw a distinction between those which are immediate and those which are permanent, or, in other words, as the causes which produce them are temporary or lasting. The habits of men change but slowly in the physical and in the moral sphere, and sudden improvements in their position are likely to lead only to waste. A striking instance of this in the East, that home of long-lived custom, is given by Mr. Brassey, who found that on the Indian railways

'the great increase of pay which has taken place has neither augmented the rapidity of execution nor added to the comfort of the labourer. The Hindoo workman knows no other want than his daily portion of rice, and the torrid climate renders water-tight habitations and ample clothing alike unnecessary. The labourer therefore desists from work as soon as he has provided for the necessities of the day. Higher pay adds nothing to his comfort; it serves but to diminish his ordinary industry.'

In this case it will be noticed that Dr. Brentano's postulate is unfulfilled: the rise in wages does not follow a rise in the labourer's standard of living, and consequently the professor's reasoning is not touched. It is hardly necessary

to point out that the statements so common a few years back as to the effect of high wages, and their tendency to produce extravagance, drunkenness, and vice, are equally beside the question. Let us now examine some further instances, in which the increase on the two sides, the advantage to the labourer and the gain to the employer, has not been proportionate. In 1871 the hours for miners in Northumberland were reduced by 16 per cent., but the increase in production did not exceed 8 per cent. So, too, in the Westphalian coal-fields in 1871, the working day was reduced from 10 and 14 hours to 8, and the average product of the mines fell from 1,072 tons per week to 919, a fall considerable in itself, but not, it will be noticed, proportionate to the reduction of hours. The results agree with the experience of Mr. Chamberlain's firm in Birmingham. Under the Factory Acts a 10 hours' day was substituted for one of 12 hours, a reduction of 17 per cent., and the product suffered to the extent of 8 per cent. A year later the firm spontaneously fixed the worker's day at 9 hours, and there was a further fall of 5 per cent. in the product. Thus it will be seen that the whole result must not be expected to follow immediately. The shortening of hours will ultimately make men apply themselves more thoroughly; they will work the harder whilst they are at work, in order that they may earn the old wages, but this more intense exertion is only possible when high wages allow of a liberal diet, and the strength of nerve and muscle which go with it. Further, it is to be noticed that these results will depend largely upon the co-operation of employers. The product of labour cannot be very greatly increased by an improvement in the labourer alone; essential as this is, there is needed in addition a continuous improvement in the machinery used. Mr. Chamberlain, for example, attributes the small reduction of output which followed on the shortening of hours to the introduction of labour-saving machinery of every kind into his factory, by which, in many cases, the work of the labourer was reduced to watching the machines and stoking the fire. Improvement, too, must be made in the organisation of labour, its division must be carried further and further, not merely among the labourers, but among the manufacturers themselves, who must specialise more and more in their various products. As these changes work their effects, old inventions which have been neglected for a time, owing to the low rate of wages, are found serviceable, and are adopted. The process tends to revolve in a circle, for here again we find

that all these improvements can be made only when a highly paid class of men is employed. The strain upon labourers grows greater as the use of machinery is extended and the motive power grows stronger. Qualities hitherto

comparison neglected come rapidly into demand. It is no longer muscular power which is the sole or the principal qualification; mental clearness, grasp and elasticity, moral self-control and trustworthiness, come more and more to take its place as characteristics of a valuable labourer; for the direction and control of machinery so costly, complicated, and delicate cannot be safely entrusted to the ordinary workman. Every year the number of spindles which a man supervises and the pace of them grow greater, and it is nerve-power which is needed for their management. Thus, in the face of constantly improving processes, the puddler, with his rude muscular strength, has almost disappeared from the iron and steel industries. The Australian farm-labourer uses a plough and a shearing-machine which would be useless in the hands of his English prototype. In the cotton industry, where, in every sense, the pace is tremendous,' all these conditions are present. Labour is every year more concentrated and more systematically divided, machinery of an improved type is constantly being substituted for the inventions of a few years back; as a result child labour is rapidly disappearing, and a better class of workmen is coming every year to the front; wages have risen in the last fifty years from an average of 281. 12s. a year to 44l. 4s., the amount of the finished article turned out by each labourer has doubled, and the cost of producing it has fallen from 28. 3d. to 18. 9d.

Let us now see what general conclusions may be drawn from our survey of the facts of industrial life, and their bearing on the question of international trade, on the ceaseless and growing competition between countries in the sphere of production and exchange. In ordinary trade success is the reward of the manufacturer who produces at the smallest cost. He buys his raw material in the cheapest market, being guided in his purchases by a thorough knowledge of quality and a sound judgement as to times and seasons. For him the cheapest article is not necessarily the lowest priced; but he gives to considerations of quality and price their proper value. He forecasts possible fluctuations in demand and supply, and has a shrewd idea at any given moment of the circumstances which control them. Having purchased his raw material, his capacity