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as may be shown by the following example. A hungry workman enters a restaurant and is confronted by a choice of two kinds of food, of which one is nutritious but unpalatable, and the other is tempting but affords little nourishment. It is evident that if the price of the latter were enhanced by a tax so as to be beyond his reach, he would eat the more wholesome food rather than go hungry. The effects of this are different according to how far he looks ahead. For short periods the gain in efficiency would be insignificant, and the loss of enjoyment considerable; but if the change in his consumption were maintained for a period of decades, his loss of enjoyment would be negligible and his gain in efficiency appreciable. If this example could be supposed to illustrate a general tendency, people might enjoy more leisure, even superfluous leisure, and yet not in effect perform less labor.

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It was argued above that the taxes here treated of would, in reducing interest, also raise wages. If these contentions be correct, the proximate effect of such taxes that is, after the requisite adjustment of industry had taken place would be to bring the necessaries for efficiency within the reach of all. Ultimately the rise of wages might check the fall in the rate of interest by making a living so easy to obtain that men of moderate desires would cease to have a motive for strenuous exertion. On the other hand, if it could be established that the mere increase in private savings could bring about a result so desirable — if the dictates of altruism and far-sighted selfishness could be shown to be so nearly identical-many who became convinced that this was the case would be likely to make the accumulation of wealth the supreme object of their lives, and no assignable bounds could be set to the savings which might be made.

Further speculations along these lines would lead us away from the sober reasoning proper to economic science. It must be remembered that a hasty and incautious interference with the normal course of trade would, temporarily at least, cause the loss of much fixed capital and specialized skill; and if the policy ran counter to public opinion it would lead not only to evasion but to discontent and idleness as well. On the whole, however, taking a broad view of the subject, there seem to be grounds for concluding that, if the revenues of the government were collected as far as possible by means of taxes on services and commodities which are likely to add little to the consumer's capacity for labor in proportion to their cost, this would ultimately tend both to increase the supply of capital and to lessen the demand, which might confidently be expected to result in a fall in the normal rate of interest. It may be added that this would so far constitute an approach to those ideal conditions under which the workman would receive the whole produce of his own labor.





Earlier resort to leaders of unions in American Federation of Labor, 322. Compulsory arbitration not tried, 324.- The War Labor Board, 326. — Its principles, 328. - Shop Committees, 329. The Railroad Administration's labor policy, 330. - The Wage Commission of 1918, 332. The permanent Board of Wages, and other adjustment boards, 332. —Local shop committees, 334. General aspects of the war developments, 336. The three types of labor adjustment, 336. The Federal Employment Service, 338. Its development to the date of the armistice and its future, 340. — Conclusion, 342.

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IN the issues of this Journal for November, 1917, and February, 1918, an account was given of the various methods which had been resorted to by the government for adjusting labor problems in war industries. The object of the present paper is to describe briefly the further developments which occurred during the last ten months of the war, and to consider these developments with reference to their bearing on labor problems and policies in time of peace.

A main theme in these earlier articles was that in order to accomplish any approximate stabilization of war labor conditions without compulsory arbitration, the government should control all contractors in war industry through provisions in the contracts limiting the contractors, under heavy penalty, to the payment of maximum scales of wages, these scales to be changed from time to time uniformly in any given industry by governmental adjustment boards, on which representatives of labor would sit. But it was pointed out that

the government could, by exercising its war power, effect this arrangement through recalling and modifying its outstanding contracts, and also its sub-contracts. Under the conditions of increasing labor shortage after February, 1918, the control most needed continued to be not that of the workers, but that of employers engaged in war industry. Such control did not emerge, either through government contracts or otherwise. The contractors continued to bid against each other for the labor supply, and an unrest developed among the workmen which seriously interfered with efficiency in production, and would doubtless have badly hampered war industry but for the motives of patriotism in all ranks of labor, organized and unorganized. It must be confessed that the national leaders of the American Federation of Labor did not in general exercise sufficient influence during those months to control their local unions in the disturbing conditions caused by the mounting competition of employers for the available labor.

Just why the influence of the national leaders in the American Federation of Labor did not prove more effective in dealing with the situation is not altogether clear; yet some of the reasons are evident. During 1917 the national union leaders had voluntarily undertaken great obligations and responsibilities by entering into written agreements with the government in which they pledged themselves and their organizations to a war-time production uninterrupted by strikes, and to the adjustment of labor disputes by representative arbitration which would be binding and final. In cantonment construction, in shipbuilding, and in general at the seaports, these written agreements forced the union leaders to assume such a vigorous leadership as greatly to increase their influence. Personal responsibility begets effort.

The particularist tendencies in unionism were checked, and the constituent national and international unions became centralized as never before in the Washington office of the American Federation of Labor.

It was intended that this method of adjustment should be extended from cantonments, shipbuilding, and the ports, over all war industry, together with the necessary concomitant of that method, namely, the control of contractors through maximum wage scales in the contracts. A preliminary memorandum, looking to an adjustment arrangement covering all munitions and supplies production, was tentatively signed by a number of union leaders in November, 1917. It is not unreasonable to believe that such a system, if carried out, would have led to a fairly satisfactory stabilization of labor. To the written pledge of the few union leaders involved in the earlier agreements, would have been added the written pledge of the many leaders whose members were interested in munitions and supplies production. But this form of contract control did not develop. Nor did the arrangements for a comprehensive adjustment board, based upon official pledges of all the national presidents with jurisdiction over production of all munitions and supplies, ever progress beyond the preliminary stage. Both of these projects encountered the baffling obstacles presented by government departments which were themselves bidding against each other for labor supply, and whose representatives could not agree upon a common course.

It was at this juncture that the current of labor adjustment in war industry became diverted into a new channel. In the new fields of war industry the international presidents did not become personally pledged in writing to agreements against strikes by members of their respective unions and to arrangements for adjust

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