EXCHANGE AND TRANSPORTATION
207. =Mercantile Exchange.=--Important as is the manufacturing
industry in the life of the city, it is only a part of the economic
activity that is continually going on in its streets and buildings.
The mercantile houses that carry on wholesale and retail trade, the
towering office-buildings, and the railway and steamship terminals
contain numerous groups of workers all engaged in the social task of
supplying human wants, while streets and railways are avenues of
traffic. The manufacture of goods is but a part of the process;
distribution is as important as production. All these sources of
supply are connected with banks and trust companies that furnish money
and credit for business of every kind. The economic activities of a
city form an intricate network in which the people are involved.
Hardly second in importance to manufacturing is mercantile exchange.
The manufacturer, after he has paid his workers, owns the goods that
have been produced, but to get his living he must sell them. To do
this he establishes relations with the merchant. Their relations are
carried on through agents, some of whom travel from place to place
taking orders, others establish office headquarters in the larger
centres of trade. Once the merchant has opened his store or shop and
purchased his goods he seeks to establish trade relations with as many
individual customers as he can attract. Mercantile business is carried
on in two kinds of stores, those which supply one kind of goods in
wholesale or retail quantities, like groceries or dry goods, and those
which maintain numerous departments for different kinds of
manufactured goods. Large department stores have become a special
feature of mercantile exchange in cities of considerable size, but
they do not destroy the smaller merchants, though competition is often
difficult.
208. =The Ethics of Business.=--The methods of carrying on mercantile
business are based, as in the factory, on the principle of getting the
largest possible profits. The welfare of employees is a secondary
consideration. Expense of maintenance is heavy. Rents are costly in
desirable locations; the expense of carrying a large stock of
merchandise makes it necessary to borrow capital on which interest
must be paid; the obligations of a large pay-roll must be met at
frequent intervals, whether business is good or bad. All these items
are present in varying degree, whatever the size of the business,
except where a merchant has capital enough of his own to carry on a
small business and can attend to the wants of his customers alone or
with the help of his family. The temptation of the merchant is strong
to use every possible means to make a success of his business, paying
wages as low as possible, in order to cut down expenses, and offering
all kinds of inducements to customers in order to sell his goods. The
ethics of trade need improvement. It is by no means true, as some
agitators declare, that the whole business system is corrupt, that
honesty is rare, and that the merchant is without a conscience.
General corruption is impossible in a commercial age like this, when
the whole system of business is built on credit, and large
transactions are carried on, as on the Stock Exchange, with full
confidence in the word or even the nod of an operator. Of course,
shoddy and impure goods are sold over the counter and the customer
often pays more than an article is really worth, but every mercantile
house has its popular reputation to sustain as well as its rated
financial standing, and the business concern that does not deal
honorably soon loses profitable trade.
Exchange constitutes an important division of the science of
economics, but its social causes and effects are of even greater
consequence. Exchange is dependent upon the diffusion of information,
the expansion of interests, and growing confidence between those who
effect a transaction. When mutual wants are few it is possible to
carry on business by means of barter; when trade increases money
becomes a necessary medium; world commerce requires a system of
credit which rests on social trust and integrity. Conversely, there
are social consequences that come from customs of exchange. It
enlarges human interests. It stimulates socialization of habits and
broader ideas. It encourages industry and thrift and promotes division
of labor. It strengthens social organization and tends to make it more
efficient. Altogether, exchange of goods must be regarded as among the
most important functions of society.
209. =Business Employees.=--The business ethics that are most open to
criticism are those that govern the relations of the merchant and his
employees. Here the system of employment is much the same as in the
factory. The merchant deals with his employees through superintendents
of departments. The employment manager hires the persons who seem best
qualified for the position, and they are assigned to a department.
They are under the orders of the head of the department, and their
success or failure depends largely on his good-will. Wages and
privileges are in his hand, and if he is morally unscrupulous he can
ruin a weak-willed subordinate. There is little coherence among
employees; there are always men and women who stand ready to take a
vacant position, and often no particular skill or experience is
required. There has been no such solidifying of interests by
trade-unions as in the factory; the individual makes his own contract
and stands on his own feet. On the other hand, there is an increasing
number of employers who feel their responsibility to those who are in
their employ, and, except in the department stores, they are usually
associated personally with their employees. Welfare work is not
uncommon in the large establishments, and a minimum wage is being
adopted here and there.
One of the worst abuses of the department store is the low-paid labor
of women and girls. It is possible for girls who live at home to get
along on a few dollars a week, but they establish a scale of wages so
low that it is impossible for the young woman who is dependent on her
own resources to get enough to eat and wear and keep well. The
physical and moral wrecks that result are disheartening. Nourishing
food in sufficient quantities to repair the waste of nerve and tissue
cannot be obtained on five or six dollars a week, when room rent and
clothing and necessary incidentals, like car-fare, have to be
included. There are always human beasts of prey who are prepared to
give financial assistance in exchange for sex gratification, and it is
difficult to resist temptation when one's nervous vigor and strength
of will are at the breaking-point. It is not strange that there is an
economic element among the causes of the social evil; it is remarkable
that moral sturdiness resists so much temptation.
210. =Offices.=--The numerous office-buildings that have arisen so
rapidly in recent years in the cities also have large corps of women
workers. They have personal relations with employers much more
frequently, for there are thousands of offices where a few
stenographers or even a single secretary are sufficient. Office work
is skilled labor, is better paid, and attracts women of better
attainments and higher ideals than in department store or factory.
Office relations are pleasant as well as profitable. The demands are
exacting; labor at the typewriter, the proof-sheets, or the
bookkeeper's desk is tiresome, but the society of the office is
congenial, working conditions are healthful and cheerful in most
cases, and there are many opportunities for increasing efficiency and
promotion. The office has its hardships. Everything is on a business
basis, and there is little allowance for feelings or disposition.
There are days when trials multiply and an atmosphere of irritation
prevails; there are seasons when the constant rush creates a wearing
nervous tension, and other seasons, when business is so poor that
occasionally there are breakdowns of health or moral rectitude; but on
the whole the office presents a simpler industrial problem than the
factory or the store.
211. =Transportation.=--A third industry that has its centre in the
city but extends across continents and seas is the business of
transportation. Manufactured goods are conveyed from the factory to
the warehouse and the store, goods sold in the mercantile
establishment are delivered from door to door, but enormous quantities
of the products of economic activity are hauled to greater distances
by truck, car, and steamship. The city is a point to which roads,
railways, and steamship lines converge, and from which they radiate in
every direction. By long and short hauls, by express and freight, vast
quantities of food products and manufactured goods pour into the
metropolis, part to be used in its numerous dwellings, part to be
shipped again to distant points. Along the same routes passengers are
transported, journeying in all directions on a multitude of errands,
jostling for a moment as they hurry to and from the means of
conveyance, and then swinging away, each on its individual orbit, like
comet or giant sun that nods acquaintance but once in a thousand
years.
The business of transportation occupies the time and attention of
thousands of workers, and its ramifications are endless. It is not
limited to a particular region like agriculture, or to towns and
cities like manufacturing; it is not stopped by tariff walls or ocean
boundaries. An acre of wheat is cut by the reaper, threshed, and
carted to the elevator by wagon or motor truck. The railroad-car is
hauled alongside, and with other bushels of its kind the grain is
transported to a giant flour-mill, where it is turned into a whitened,
pulverized product, packed in barrels, and shipped across the ocean to
a foreign port. Conveyed by rail or truck to the bakery, the flour
undergoes transformation into bread, and takes its final journey to
hotel, restaurant, and dwelling-house. Similarly, every kind of raw
material finds its destination far from the place of its production
and is consumed directly or as a manufactured product. This gigantic
business of transportation is the means of providing for the
sustenance and comfort of millions of human beings, and in spite of
the extensive use of machinery it requires at every step the
co-operative labor of human beings.
212. =Growth of Interdependence.=--It is the far-flung lines of
commerce that bind together the peoples of the world. Formerly there
were periods of history, as in the European Middle Ages, when a social
group produced nearly everything that it needed for consumption and
commerce was small; but now all countries exchange their own products
for others that they cannot so readily produce. The requirements of
commerce have broken down the barriers between races, and have
compelled mutual acquaintance and knowledge of languages, mutual
confidence in one another's good intentions, and mutual understanding
of one another's wants. The demands of commerce have precipitated
wars, but have also brought victories of peace. They have stimulated
the invention of improved means of communication, as the demands of
manufacturing stimulated invention of machinery. The slow progress of
horse-drawn vehicles over poor roads provoked the invention of
improved highways and then of railroads. The application of steam to
locomotives and ships revolutionized commerce, and by the steady
improvements of many years has given to the eager trader and traveller
the speedy, palatial steamship and the _train de luxe_.
Transportation depends, however, on the man behind the engine rather
than on the mass of steel that is conjured into motion. Successful
commerce waits for the willingness and skill of worker and director.
There must be the same division and direction of labor and the same
spirit of co-operation; there must be intelligence in planning
schedules for traffic and overcoming obstacles of nature and human
frailty and incompetence. The teamster, the longshoreman, the
freight-handler, and the engineer must all feel the push of the
economic demand, keeping them steadily at work. A strike on any
portion of the line ties up traffic and upsets the calculations of
manufacturer, merchant, and consumer, for they are all dependent upon
the servants of transportation.
213. =Problems of Transportation.=--There are problems of
transportation that are of a purely economic nature, but there are
also problems that are of social concern. The first problem is that of
safe and rapid transportation. The comfort and safety of the millions
who travel on business or for pleasure is a primary concern of
society. If the roads are not kept in repair and the steamship lanes
patrolled, if the rolling-stock is allowed to deteriorate and become
liable to accident, if engine-drivers and helmsmen are intemperate or
careless, if efficiency is not maintained, or if safety is sacrificed
to speed, the public is not well served. Many are the illustrations of
neglect and inefficiency that have culminated in accident and death.
Or the transportation company is slow to adopt new inventions and to
meet the expense that is necessary to equip a steamer or a railroad
for speed, or to provide rapid interurban or suburban transit. Poor
management or single tracks delay fast freights, or congested
terminals tie up traffic. These inconveniences not only consume
profits and ruffle the tempers of working men, but they are a social
waste of time and effort, and they stand in the way of improved living
conditions. The congestion of population in the cities can easily be
remedied when rapid and cheap transit make it possible for working men
to live twenty or thirty miles out of town. The standard of living can
be raised appreciably when fast trolley or steam service provides the
products of the farms in abundance and in fresh condition.
Another problem is that of the worker. The same temptation faces the
transportation manager that appears in the factory and the mercantile
house. The expenses of traffic are enormous. Railways alone cost
hundreds of millions for equipment and service, and there are periods
when commerce slackens and earnings fall away. It is easier to cut
wages than to postpone improvements or to raise freight or passenger
rates. In the United States an interstate commerce commission
regulates rates, but questions of wages and hours of labor are between
the management and the men. Friction frequently develops, and
hostility in the past has produced labor organizations that are well
knit and powerful, so that the railroad man has succeeded in securing
fair treatment, but there are other branches of transportation service
where the servants of the public find their labor poorly paid and
precarious in tenure. Teamsters and freight-handlers find conditions
hard; sailors and dock-hands are often thrown out of employment. Whole
armies of transportation employees have been enrolled since
trolley-lines and automobile service have been organized. Fewer
persons drive their own horses and vehicles, and many who walked to
and from business or school now ride. Transportation service has been
vastly extended, but there are continually more people to be
accommodated, and motor-men, conductors, and chauffeurs to be adjusted
to wage scales and service hours.
214. =Monopoly.=--A persistent tendency in transportation has been
toward monopoly. Express service between two points becomes controlled
by a single company, and the charges are increased. A street-railway
company secures a valuable city franchise, lays its tracks on the
principal streets, and monopolizes the business. Service may be poor
and fares may be raised, unless kept down by a railroad commission,
but the public must endure inconvenience, discomfort, and oppression,
or walk. Railroad systems absorb short lines and control traffic over
great districts; unless they are under government regulation they may
adjust their time schedules and freight charges arbitrarily and impose
as large a burden as the traffic will bear; the public is helpless,
because there is no other suitable conveyance for passengers or
freight. It is for these reasons that the United States has taken the
control of interstate commerce into its own hands and regulated it,
while the States have shown a disposition to inflict penalties upon
recalcitrant corporations operating within State boundaries. It is the
policy of government, also, to prevent control of one railroad by
another, to the added inconvenience and expense of the public. But
since 1890 there has been a rapid tendency toward a consolidation of
business enterprises, by which railroads became united into a few
gigantic systems, street railways were consolidated into a few large
companies, and ocean-steamship companies amalgamated into an
international combination.
215. =Government Ownership vs. Regulation.=--Nor did monopoly confine
itself to transportation. The control of public utilities has passed
into fewer hands. Coal companies, gas and electric light corporations,
telegraph and telephone companies tend to monopolize business over
large sections of country. Some of these possess a natural monopoly
right, and if managed in the interests of the public that they serve,
may be permitted to carry on their business without interference. But
their large incomes and disposition to oppress their constituents has
produced many demands for government ownership, especially of coal
companies and railroads, and though for less reason of telephone and
telegraph lines. Government ownership has been tried in Europe and in
Australasia, but experience does not prove that it is universally
desirable. There are financial objections in connection with purchase
and operation, and the question of efficiency of government employees
is open to debate. Enough experiments have been tried in the United
States to render very doubtful the advisability of government
ownership of any of these large enterprises where politics wield so
large a power and democracy delights to shift office and
responsibility. But it is desirable that the government of State and
nation have power to regulate business associations that control the
public welfare as widely as do railroads, telegraph-lines, and
navigation companies. By legislation, incorporation, and taxation the
government may keep its hand upon monopoly and, if necessary,
supersede it, but the system which has grown up by a natural process
is to be given full opportunity to justify itself before government
assumes its functions. It is hardly to be expected that government
regulation will be faultless, American experience with regulating
commissions has not been altogether satisfactory, but society needs
protection, and this the government may well provide.
216. =Trusts.=--The tendency to monopoly is not confined to any one
department of economic activity. Manufacturing, mercantile, and
banking companies have all tended to combine in large corporations,
partly for greater economy, partly for an increase of profits through
manipulating reorganization of stock companies, and partly for
centralization of control. In the process, while the cost of certain
products has been reduced by economy in operating expenses, the
enormous dividend requirements of heavily capitalized corporations has
necessitated high prices, a large business, and the danger of
overproduction, and a virtual monopoly has made it possible to lift
prices to a level that pinches the consumer. By a grim irony of
circumstance, these giant and often ruthless corporations have taken
the name of trusts, but they do not incline to recognize that the
people's rights are in their trust. Not every trust is harmful to
society, and certainly trusts need not be destroyed. They have come
into existence by a natural economic process, and as far as they
cheapen the cost of production and improve the manufacture and
distribution of the product they are a social gain, but they need to
be controlled, and it is the function of government to regulate them
in the interests of society at large. It has been found by experience
that publicity of corporate business is one of the best methods of
control. In the long run every social organization must obtain the
sanction of public opinion if it is to become a recognized
institution, and in a democratic country like the United States no
trust can become so independent or monopolistic that it can afford to
disregard the public will and the public good, as certain American
corporations have discovered to their grief.
217. =The Chances of Progress.=--Every economic problem resolves
itself into a social problem. The satisfaction of human wants is the
province of the manufacturer, the merchant, and the transporter, but
it is not limited to any one or all of these, nor is society under
their control. The range of wants is so great, the desires of social
beings branch out into so many broad interests, that no one line of
enterprise or one group of men can control more than a small portion
of society. The whole is greater than any of its parts. There will be
groups that are unfortunate, communities and races that will suffer
temporarily in the process of social adjustment, but the welfare of
the many can never long be sacrificed to the selfishness of the few.
Social revolution in some form will take place. It may not be
accomplished in a day or a year, but the social will is sure to assert
itself and to right the people's wrongs. The social process that is
going on in the modern city has aggravated the friction of industrial
relations; the haste with which business is carried on is one of its
chief causes; but the very speed of the movement will carry society
the sooner out of its acute distresses into a better adjusted system
of industry. So far most of the world's progress has been by a slow
course of natural adjustment of individuals and groups to one another;
that process cannot be stopped, but it can be directed by those who
are conscious of the maladjustments that exist and perceive ways and
means of improvement. Under such persons as leaders purposive progress
may be achieved more rapidly and effectually in the near future.
READING REFERENCES
HADLEY: _Standards of Public Morality_, pages 33-96.
NEARING: _Wages in the United States_, pages 93-96.
NEARING AND WATSON: _Economics_, pages 241-255, 314-320.
VROOMAN: _American Railway Problems_, pages 1-181.
BOLEN: _Plain Facts as to the Trusts and the Tariff_, pages 3-236.
BOGART: _Economic History of the United States_, pages 186-216,
305-337, 400-418.
MONTGOMERY: _Vital American Problems_, pages 3-91.