and higher costs is familiar to you all; and, growing as fast as the wages grew, followed the false doctrine that wages had no economic limitations, but could be set at any arbitrary figure whatever, and that all other things would adjust themselves to it.

This disregard of the natural laws of business and commerce did not by any means prevent the automatic application of them, and a large part or the whole of each increase in wages was promptly taken away by the increased cost of living, until at last even the blindest could see what was meant by a "vicious circle," with the encouraging result that events of the last six months indicate that a sounder viewpoint on the theory of wages is becoming quite generally accepted.

The corollary to the fallacious doctrine that there is no economic wage limitation, is that productive effort is a factor equally independent of economic principles, and this has resulted in, or at least permitted, a very marked decrease in efficiency or man-hour output. Unlike the wage question this misapprehension apparently still persists and public sentiment has not yet been aroused to a proper conception of its effects. This is, however, a feature which I shall present to you at greater length further on.

With the exception of railroads, the industrial facilities of the country have now been turned back to their owners and they have been restored with remarkable celerity to the occupations for which they were established, and, further, their business and business in general is at this time brisk and buoyant despite high wages and inefficient labor.

Simply as a comment I wish, however, to point out that the degree or ratio of business increase over pre-war times is apparently greater than in fact it really is; because statistics. measure it in money and, prices having doubled, the same unit output has the appearance of having doubled. Nevertheless, business has undoubtedly increased even when measured by the unit output, and I believe that, given industrial peace and efficient work, it probably would soon reach record-breaking figures.

A development of great business activity would be in accord with frequent experience as to the course of business after a war; as, for example, after our own Civil War; when it amounted to a boom which lasted until the panic of 1873.

In fact, the North laid its foundation of prosperity in the

interval of the Civil War despite the financial convulsion of 1873, and notwithstanding that the conditions are different at the present time, because there is no longer a great West to be opened up and transcontinental railroads to be built, there is nevertheless ample foundation for a similar period of prosperity with perhaps the same danger of a boom.

For four years the orderly process of development and expansion necessary to satisfy the growing needs of this very wealthy nation of ours has been interrupted, and facilities and supplies of almost every nature which are required by our complex system of living are now inadequate, yet we have the men, money and materials to produce them. Therefore, it appears safe to say without reservation that there now exists ample foundation for a period of great industrial activity and prosperity.

Moreover, in addition to our domestic necessities, the requirements of Europe, if she can find a way to pay for them, may be expected to increase the volume of business to a demand which our present productive facilities, worked at their utmost, could not meet.

Under such circumstances there appears to be a promising outlook, but nevertheless serious difficulties and menaces stand in the way, much more serious than a panic due merely to overexpansion and recklessness such as occurred in 1873, and future prosperity would look very dark except for the fact that solution of them is quite within control of the people; and, if they are not overcome, it will simply show that our capacity and intelligence are not sufficiently developed to readjust our complex economic system, once it has been thrown out of gear.

While I hesitate to subscribe to the theory that war is a civilizing agency, it still remains a fact that nations have often emerged from them with stronger moral fibre, and the ruins of industry have usually been restored with rapidity which in each case has been surprising, and I believe that, notwithstanding this has been the most destructive war of all time, history will repeat itself, if only the people's intelligence has grown as fast as their institutions have grown.

Here in the United States there are perhaps two outstanding problems which call for a correct solution in order to escape from a very probable industrial breakdown, and a third one having more to do with Europe than with our own industrial welfare.

The first and by far the most important has to do with industrial unrest, concerning which many theories are advanced; and, just in passing, I would like to comment on one of them. Of all the theories which have been promulgated as being the reason for the present industrial unrest, the weakest one, in my opinion, is the theory that by reason of the highly specialized form which our industrial system has taken a man's work has become monotonous; that he no longer has any opportunity for self-expression, whatever that may be; that he has less satisfaction with life than he formerly had because he is unable to see the completion of a thing of which he is making only a part; and that the result is a monotonous existence which shows in his lustreless eye and hopeless face.

In the first place, the modern workman as I know him (and I have had an opportunity of seeing a good many thousands of them) is not an individual with the lack-lustre eye and a hopeless face. He is quite the contrary. He is a self-possessed, alert, independent individual and he knows just what he wants in or from his work, and the principal thing that he wants is the highest wage possible. He certainly is not unique in having that aim, because that is what most of us want.

The only time he may be found with a hopeless look in his eye is when he is confronted with some enthusiastic social investigator, who fixes him with his glittering eye and endeavors to probe the inmost recesses of his soul. Any or all of us would look a little dull at such a moment.

As to the theories of lack of opportunities for self-expression and the terrible monotony brought about by our present departmentized system of industry, there is even less substance in these than in the lack-lustre eye discovery.

As to monotony; there is just as much fun in laying bricks now as there was 100 years ago; there is just as much variety to be found in digging a ditch as there could have been 1,000 years ago or 50 years ago. I would, personally, rather brake on a modern freight train than drive a fat yoke of oxen on a dusty New England road as I did back in the 70's.

I think most men would find more enjoyment in running a lathe in a modern machine-shop than they would have found in forging nails by hand as they did 100 years ago.

I think work in a steel mill compares very favorably with the festive brick-yard or stone-quarry of 1,000 years ago or 50 years ago.

If a greater satisfaction with life comes from seeing one's work completed, surely the men employed in the building trades ought to be among the most contented people in the country, because a modern sky-scraper goes up almost while you look at it.

The place of all others where a man can see the full completion of his labor is on the farm; where he sows the seed, cultivates the crops, can see them grow daily, and harvests them in the autumn. Having completed his work, he prepares for the winter. He can then sit beside the fire on a winter's evening with a howling northeaster outside and experience to the fullest the satisfaction of having completed his work, in the thought that the live-stock is well housed and the cellar is full, including two or three barrels of cider. If satisfaction with life comes from contemplation of the fruition of one's work, then there should be an exodus to the farms, but this is the very place where it is found most difficult to get sufficient men to do the work.

I repeat that the theory which I have just outlined is the thinnest one of all, and venture to assert that the greatest factor in industrial unrest, which may be either one of the causes or one of the effects of unrest, is the present extraordinary letdown in the productive effort of the working people of the world. This is more likely to be a cause than an effect of industrial unrest, because it is every man's experience that, when he finds on his hands idle time to which he has not been accustomed, he begins to get worried over what he can do with it; and, given an aggregation of 10,000 men together, all of them having idle time to which they have not been accustomed, if under such circumstances the "psychology of the crowd" expresses itself simply in discontent and goes no further, it is about as mild an outcome as one could reasonably expect.

However, social unrest is here; and, whether it be cause or effect, I believe that the largest factor in it is that the people are doing less work now than they have been accustomed to doing; in fact, they are perhaps doing insufficient work for the needs of the community, and insufficient productive effort is an ill of the community which transcends in its vital importance all questions of strikes, wages, prices, and in fact everything else, and which, if continued long, will surely destroy prosperity, because the failure of a people to work hard enough to supply their own needs can have but one end and that is poverty and all that comes with it.

I do not assert that our lack of efficiency has reached that point yet, because time is necessary to determine whether it has or not. I only know that we must work to live and that we are not working nearly as hard as we did before the war; and I also know that our style of living has caused former luxuries to become necessities and that therefore our necessities have largely increased.

There is no escape from the conclusion that if we are safe now we must have had a wide margin of safety before the war, because the let-down in unit output per man hour in this country as compared with pre-war conditions has been approximately 20 to 30 per cent.

No one has heretofore entertained the idea that we produced 20 to 30 per cent more than we needed before the war, but one must entertain it now or accept the alternative, fantastical as the alternative seems to be.

If there was a surplus of that amount, it couldn't have been measured in business profits or savings of the people, because no such ratio of profit is shown by either the reflections of common sense or by published statistics; nor do I believe that the people saved that proportion of their earnings; it couldn't have been measured by the increase in our national wealth because it does not increase at that rate. Therefore, if the margin existed at all, it cannot be proved.

Now, if it cannot be proved, self-preservation, regardless of all other considerations, demands that the doubt be resolved on the side of safety and that simply means that the productive effort of every man should be at least increased to the unit output which he was able to accomplish before the war.

Surely, this is the minimum that an intelligent people should be willing to do, and I believe it is what they must do or suffer the consequences.

In normal times the consequences are comparatively mild. When prices reach a level which is not supported by a sound economic foundation at home, then foreign goods come into the market in competition and thus a reasonable balance of productive effort is forced upon us by dull times, which temporarily increase unemployment and make men increase their output in order to hold their jobs, and the trouble is usually soon remedied.

This safety valve no longer exists; and, not only the United States, but also the whole industrial world is thrown upon its