The same general considerations which apply to raw wool hold good as
to its manufactures. There is no such thing as an average cost of
production of woolen cloth in the United States. The enormous variety
of cloths produced in the same mill proved an insuperable obstacle to
the Tariff Board, which gave up the attempt to ascertain the actual
cost of production. Instead, it undertook to obtain estimates from
manufacturers of the cost of producing cloths, samples of which were
furnished to them by the board. Assuming that all the estimates were
made in good faith and that the agents of the board were all competent
and equal to the task of checking them with the meager means at their
command, the average costs even by the board represent widely differing
conditions of industrial efficiency.
Industrial efficiency depends on a great many conditions an adequate
discussion of which would take in far afield. One fact, however, stands
out preëminently, and must be emphasized until it is seared into the
consciousness and conscience of the American citizen, and that is that
industrial efficiency, which is synonymous with low-labor cost, does
not mean, or depend upon, low wages. Yet the lower wages in Europe
constitute the stock argument in every plea for protection that is
dinned into the ears of Congress.
Not being in a position to make a comprehensive inquiry into the
efficiency of American mills in the woolen industry, the Tariff Board
made a study of labor efficiency in the various process of wool
manufacture in connection with output and wages paid. Almost invariably
the mill paying higher wages per hour showed lower costs than its
competitor with lower wages.
Thus, in wool scouring the lowest average wages paid to
machine-operatives in the thirty mills examined was found to be 12.16
cents per hour, and the highest 17.79. Yet the low-wage mill showed a
labor cost of twenty-one cents per hundred pounds of wool, while the
high-wage mill had a cost of only fifteen cents. One of the reasons for
this puzzling situation was that the low-wage mill paid nine cents per
hundred pounds for supervisory labor, such as foremen, etc., while the
high-wage mill paid only six cents. Apparently well-paid labor needs
less driving and supervising than low-paid labor.
In the carding department of seventeen worsted mills the mill paying
its machine-operatives an average wage of 13.18 cents per hour had a
machine labor cost of four cents per hundred pounds, while the mill
paying its machine-operatives only 11.86 cents per hour had a cost
of twenty-five cents per hundred pounds. This was due largely to
the fact that the lower-cost-high-wage mill had machinery enabling
every operator to turn out more than 326 pounds per hour, while the
high-cost-low-wage mill it turning out less than forty-eight pounds
per hour.
The same tendency was observed in the carding departments of twenty-six
woolen mills. The mill with the highest machine output per man per
hour, namely 57.7 pounds, had a machinery-labor cost of twenty-three
cents per hundred pounds, while the mill with a machine output of only
six pounds per operative per hour had a cost of $1.64 per hundred
pounds. Yet this mill, with a cost seven times higher than the other,
paid its operatives only 9.86 cents per hour, as against 13.09 cents
paid by its more successful competitor.
These examples could be repeated for every department of woolen and
worsted mills, but will suffice to illustrate the point that higher
wages do not necessarily mean higher costs. They show that mill
efficiency depends more on a liberal use of the most improved machinery
than on low wages. Thoughtful planning in arranging the machinery
to save unnecessary steps to the employees, careful buying of raw
materials, the efficient organization and utilization of the labor
force in the mill, systematic watching of the thousands of details,
each affecting the cost of manufacture, will reduce costs to an
astonishing degree. When the board, therefore, states that the labor
cost of production in this country is on the average, about double that
in foreign countries, we must bear in mind the difference in costs in
our own country, and the causes to which high costs are due. The fact
is that the woolen industry, being one of the best, if not the best,
protected industry in the country, shows an exceptional disposition to
cling to old methods and to use machinery which long ago should have
been consigned to the scrap-heap. That is where the chief cause of the
comparatively high cost of production in a large part of the industry
is to be looked for.
But, disregarding the question of efficiency, let us accept the figure
of the Tariff Board, which found the labor cost in England to be one
half that here, taking the manufacture from the time the wool enters
the mill until it is turned out as finished cloth. The entire labor
cost varies from twenty to fifty per cent. of the total cost of making
cloth, according to the character of the cloth, and but seldom exceeds
or approaches fifty per cent. If the protective duty is to measure the
difference in labor cost, it should be fixed at not above twenty-five
per cent. of the cost, that being the highest difference between the
American and English labor cost. As against that, we now have a duty of
about fifty-five per cent. of the selling price of the foreign cloth,
in addition to the concealed protection in the so-called compensatory
duty.
For decades we have been assured that all the manufacturer wanted was
a duty high enough to compensate him for the higher wages paid in this
country. In 1908 the Republican party laid down the formula that the
tariff is to measure the difference in the cost of production at home
and abroad, including a “reasonable profit to the manufacturer.” To-day
the party has advocates of all kinds of protection, from those who
wish the tariff to measure the difference in labor cost of the most
efficient mills in this and foreign countries, as advocated by Senator
LaFollette, to those who wish a tariff high enough to keep out foreign
importations.
Whatever may be done with Schedule K by the Democratic Congress, it is
time that we dismiss the hoary legend that the duties are maintained
solely in the interest of the highly paid American working-man. The
assertion comes with specially poor grace from the woolen and worsted
industry, the most highly protected industry in the United States,
paying the lowest wages to skilled labor. With the earnings of the
great bulk of its employees averaging through the year less than ten
dollars a week, while wages are about double that figure in less
protected industries; with its workmen compelled to send their wives
and children to the mills as an alternative to starvation on the
man’s earnings; with the horrors of living conditions of the Lawrence
mill-workers still ringing in our ears, it is time that we face the
situation squarely and, whatever degree of protection we decide to
maintain, that we frankly admit that it is primarily for the benefit of
the capital invested in our industries.
Russia, Germany, and France do so frankly, and free-trade England
manages to compete with them in the markets of the world, while paying
higher wages to its employees. In turn we beat these nations, in their
own and in the world’s markets, in the products of the very industries
in which we pay the highest wages.