During the past two or three years a statement purporting to give the relation of wages to cost of production, or the proportion of labor cost to the whole cost, has been going the rounds of the press. This statement has generally been in the following form:

Mr. Carroll D. Wright, the national labor statistician, has figured out that the average rate of wages per year paid in the United States is $347, and the average product of each laborer is valued at $1,888. This gives the employer 82.2 per cent, while the man who does the work and produces the results is allowed a paltry 17.8 per cent. In spite of our boasted free country and high wages, the fact remains that the proportion of the proceeds of his labor paid to the American workingman is smaller by far than that paid to any other workingman in any civilized or uncivilized country on the globe.

Sometimes the article varies in its statement, both in percentages quoted and in other essential features, but usually conforms very closely to the foregoing extract, which has been taken literally from one of the newspapers in which it appeared. The prominence given to this statement warrants its notice in the Bulletin. Ordinarily it is not our purpose to use its pages for current items, but the figures quoted and the statement that they are upon the authority of the Commissioner of Labor make this case an exception. The figures themselves are in the main correct; they relate more particularly to the census of 1880 than to any other collection of data. An analysis of the figures and the facts underlying them shows the fallacy of the conclusion drawn from them.

If the aggregate wages paid in the manufacturing and mechanical industries of the United States, as shown by the census of 1880, be divided by the total number of employees to whom the wages were

INDUSTRIAL COMMUNITIES.(a)

BY W. F. WILLOUGHBY.

CHAPTER I.

INTRODUCTION.

The growth of the large industry and the creation of special industrial centers constitute two of the most marked industrial changes of recent years. They are the last steps in the evolution of the factory system from the régime of individual handicraft production. This has necessitated the aggregation in one center of large numbers of workingmen, who, with their families, are dependent upon a single industry, and this in turn has given rise to conditions and problems peculiar to such places. The present study deals with the results of an investigation into the conditions of labor and industry in those special industrial centers where a large number of workingmen have been brought together in one place, all dependent upon a single large establishment, and under such conditions as to constitute more or less selfcontained communities.

The town of Essen, Germany, the seat of the great iron and steel works of Friedrich Krupp, is the best and most widely known example of this class of industrial communities in Europe. Essen has therefore been taken as the type of communities to be investigated, and the effort has been made to consider all the industrial centers of importance closely approaching it in character.

Inevitably in such centers there have developed systems of special institutions that give to each a special life and character of its own. It has been thought a matter of importance to determine as far as possible what changes have here been introduced into the organization of industry, and the results, beneficial or otherwise, to which they have given rise.

The most important of these results is the enormous development of common interests. Greater interdependence of interests, both between the workingmen themselves and between the workingmen and their employers, is the fundamental result of all recent industrial changes.

a This article is the first of a series upon this subject to be published in successive numbers of the Bulletin. Each article will be complete in itself, giving the results of the investigation as to one or more communities. The investigation was made by the author during personal visits to the several communities dealt with. The author desires to express his sense of obligation to the officials of the companies whose operations furnish the subject-matter of these articles for their courteous assistance, which alone has rendered the study possible.

The larger the industry and the greater the number of employees gathered together in the same place, the greater the interdependence of interests, and the greater the consequent need for joint action.

A second important result is the changed relations between the employers and employed. The last half century has witnessed a radical change of thought in regard to this point. Formerly, in what M. Leroy Beaulieu calls the chaotic period of the large industry, employers were almost of one mind, namely, that their duties toward their employees ceased with the payment of their wages. If obligation there was, they believed that it was on the part of the workingmen for the employment furnished them. To-day much of this is changed. The owners of the means of production, in great part, feel that all should be done that can be, consistent with the financial prosperity of their establishments, to render the conditions of labor favorable. This change between the relations of the employer and employed is most marked in the case of the industrial centers coming within the field of this investigation. It is indeed the dominant fact that gives to these places their special character as distinguished from other industrial localities. The condition of affairs where an industrial undertaking is carried on during successive generations in the same place, and where, as a result, there has grown up around it a class of workingmen who, entering the employment of the establishment as boys, have spent the entire active portion of their lives in its service, tends to create feelings of mutual obligations of exceptional strength. These obligations are mostly on the part of the employers.

To cite but a few of them, there are: The care of public health; the provision against accidents; the erection of dwellings where the workingmen are not already suitably housed; the encouragement of habits of economy and foresight, etc. This by no means implies that employers should look upon employees as persons to be taken care of, or that the expense of institutions for their benefit should be wholly borne by them. There is no doubt that a company can do a great deal in the way of the promotion of institutions and the encouragement of habits of economy among its employees without at all subjecting itself to the charge of paternalism.

In all great industrial establishments one can conceive of but three principal modi vivendi between the employers and their employees: jost, indiflorence; second, patronage, where institutions are created to the benefit of employees by the employer, over which he exercises site control; third, mutuality, or the encouragement of the organiwww.oxutions by workingmen, the management of which is as * Se Act in their hands.

4 point of view, then, this is in great part an investisex that have been freely organized in connection chments for the benefit of workingmen. To this

6 for investigation, special care was taken to Save institutions the best developed or the