ment as to the effect of such combinations; and it employs over 200,000 workmen, while its largest competitor employs less than

20,000.

It may be well first to consider briefly who the steel workers are. Not over twenty per cent of the employees in blast furnaces and rolling mills can be regarded as highly skilled. Twenty to twentyfive per cent more may be termed semi-skilled, and the remaining fifty-five to sixty per cent are unskilled laborers. Roughly, the gradations in skill correspond to gradations in nationality. You will not find an Anglo-Saxon among the unskilled; you will hardly find one in ten who is American born. Sixty per cent of them are unnaturalized and a third are unable to speak the English language.

The steel industry has had an increasing demand for the raw South-European immigrants, and there is reason to believe that the demand will be larger as time goes on.

Let us turn next to labor conditions. Employees in sheet and tin mills work in three shifts of eight hours each. Yard laborers, shop men, and tube-mill workers have a ten-hour day. In the actual manufacturing processes, however, and in the rolling of rails, beams, and plates, the regular working day is twelve hours. Fully fifty per cent of the men in the industry have a twelve-hour day. The employees in several departments work seven days a week. The situation is aggravated by the night crew of one week becoming the day crew during the next week. The change in shifts forces a crew to remain on duty 24 hours once in two weeks.

It is difficult to make a statement regarding wages, because the wage schedule of a steel mill is a very complex affair. In 1907 I was given wage figures from the pay roll of a Steel Corporation mill in the Pittsburgh district. The figures included all of the men in five departments of a steel mill, including every necessary step in the process of turning pig iron into a finished steel product. There were 2,304 men included, and they were grouped according to earnings as follows: 125, or approximately five per cent, received over $5 a day; 524, or twenty-three per cent, received between $2.50 and $5.00, and 1,655, or seventy-two per cent, received $2.50 a day or less.

In May, 1910, a general wage increase was announced by the Steel Corporation, which was described as averaging six per cent. This increase, so far as common labor is concerned, amounted to one cent an hour. The rate in 1908 was 16 1-2 cents an hour in the Pittsburgh district, and it is now 17 1-2 cents. This is the highest rate paid by the Steel Corporation. In its Chicago mills the rate is 17 cents, and in its Birmingham, Alabama, mills it is 13 to 14 cents.

Professor Chapin, in his study made for the Russell Sage Foundation, decided that a decent standard of living could not be maintained in New York City by a family of five persons on an annual income of less than $800, and that there is no assurance that it can be maintained on an income below $900. No unskilled steel worker in America can earn even $800 a year on the rate that is being paid today.

I now come to what I shall call the ameliorative efforts of the Steel Corporation-the things regarded by the Corporation as done on the credit side of the account.

First in this list I shall place the campaign for safety. In the past the steel industry has had an unenviable record of accidents to workmen. However, much has been done in the installation of safety devices and the inculcation of habits of caution. The hospital service is generally good. The pension fund of $4,000,000 left by Andrew Carnegie and a fund of the American Steel and Wire Company, one of the constituents of the corporation, have been consolidated and the capital increased to $12,000,000, the income to be used to pension superannuated or disabled employees of the corporation.

The steel industry was never thoroughly unionized, although prior to the formation of the Steel Corporation there was a considerable amount of unionism in the Pittsburgh district. The Carnegie Company had eliminated unionism from its plants in 1892, and of the large plants rolling rails and structural material, the Illinois Steel Company was the only one entering the corporation with union labor. Soon afterward, however, in 1901, the plants of this company were freed from unionism through a strike. During this strike. the executive committee of the corporation adopted a resolution in opposition to organized labor and declared that it would not permit its extension. After this it apparently adopted a policy looking to the extermination of organized labor. As a result union labor has now been eliminated from all its properties, with the possible exception of its railroads. The corporation is absolutely opposed to collective bargaining and has adopted a number of plans calculated to prevent an outbreak of organization on the part of its employees.

The pension plan, although a desirable thing in itself, has the effect of keeping men silent who might wish to protest against existing conditions. In order to enjoy its benefits, the men must have served twenty years continuously in the employ of the corporation or of one of its subsidiaries. This effectively prevents any stoppage of work as a protest against anything considered unjust by the workmen, if they would keep their record such as to enable them

to draw the pension in old age. The pension rules also specifically set forth the obvious truth that the Corporation does not give up its right to discharge its employees. There is nothing in it to pretect a man excepting his subservience to his superior officers, and the nearer he approaches toward twenty years of continuous service, the greater his subservience may conceivably be-for he might be discharged at the end of nineteen years and eleven months and his right to the pension would be forfeited.

The so-called profit-sharing plan also has features designed to keep the employee from standing out vigorously in defense of what he may consider his rights. The rules plainly state that the yearly $5 bonus for each share of stock, and the additional bonus at the end of each five-year period, are to go, not as a matter of right to each employee who holds stock, but only to those whom the executive officials may consider loyal.

Under these two systems, then, a man will utterly fail of securing the benefits offered if he is offensive to the administrative officials. He may take his choice between exercising his right to register his objections to working conditions or to the labor contract and run the risk of losing his right to the benefits offered, or he may withhold his protests, if he has any, and establish his reputation for loyalty by keeping silent. The effect of this attitude of the Corporation tends, in a great many instances, to outweigh anything that it may do in the direction of providing better labor conditions.

Unionism is a very faulty and often a dangerous form of organization. But we have so far worked out no better method of establishing justice in industrial matters than leaving it to the bargaining strength of the two parties to the contract.

C. THE SOCIALIST'S INDICTMENT OF CAPITALISM 361. Marx's Theory of the Development of Capitalism18

BY WERNER SOMBART

Marx held a particular view concerning the period of history in which we are now living, that is to say, concerning the age of Capitalism, and this view tried to show the justification for the socialist movement. He showed it in two ways. In the first place, he attempted to prove that the present capitalist system, by virtue of its

18 Adapted from Socialism and the Social Movement, 6th ed., 71–86. Published by E. P. Dutton & Co. (1908).

inherent qualities, contained within itself the germs of its own decay; and, in the second place, that as the capitalist system decays it creates the necessary conditions for the birth of socialist society. These ideas may be thus expressed. The capitalist system, in its onward flow, develops phenomena which prevent the smooth working of the great producing machine. On the one hand we have increasing socialization of production-the tendency for production to be more and more on a large scale; for big businesses to swallow up smaller ones-and the increasing intensity in production. On the other hand, the direction of production and its distribution are still in private hands-in those of the capitalist undertaker.

These tendencies come into more serious opposition as time goes on, and the result is that commercial crises, that disease to which capitalist organization of industry is so liable, appear periodically, and with more and more disastrous results. "Not only are many of the commodities already produced wholly destroyed in these crises, but a good many of the instruments of production are subject to a similar fate. In these crises a social epidemic breaks out such as in all earlier ages would have been accounted madnessthe epidemic of overproduction. Society finds itself for the time being in a state of barbarism; it is as though a famine or a general war of extermination had cut off all supplies of the necessaries of life. Industry and commerce seem to be destroyed."

The inner conflict in the capitalist organization of society is reflected in the growing opposition between the two classes on which that organization rests-between the bourgeoisie and the proletariat.

The bourgeois class, owing to the "centralization of capital," is represented by a constantly decreasing number of capitalists, and the proletariat by a constantly increasing mass of impoverished individuals who sink deeper and deeper in misery. "The modern worker, instead of rising with the advance of industry, sinks deeper and deeper because of the conditions which his own class imposes upon him. The worker becomes a pauper, and pauperism develops even more quickly than population or wealth. This makes it abundantly clear that the bourgeoisie is incapable of remaining the ruling class in society, and of forcing society to accept the conditions of its existence as a general law regulating the existence of society as a whole. The bourgeoisie is incapable of bearing rule because it is unable to ensure for its slaves a bare existence, because it is forced to place them in a position where, instead of maintaining society, society must maintain them." It is the misery here mentioned that produces rebellion; the proletariat rises against the ruling class.

And it is able to do this because it has been "trained, united and organized" by "the very mechanism of the process of capitalist production." "The hour of capitalist property has struck. Those who have expropriated others are now themselves expropriated." "Society will openly and directly take possession of the means of production" and the difficulties inherent in the capitalistic system will be removed. To take hold of power in this way, and so to introduce a new economic organization, will be possible because all the necessary conditions will have been created by the capitalist organization "constantly increasing co-operation in labour, application of technical knowledge, the derivation of the maximum produce from the soil, the transformation of the instruments of labour into such as may be used in common by many workers, the inclusion of all peoples in the net of the world market."

This broad theory of evolution comprises a number of single theories.

(1) The Theory of Concentration was adopted by Marx from Louis Blanc. Marx enlarged and illustrated it in a most brilliant fashion. The theory lays it down that under the pressure of the competition inherent in the capitalist system, capitalist undertaking completely drives out the methods of production which existed in pre-capitalistic times; it swallows up the small, independent producers; and then "one capitalist destroys many," or "many capitalists are expropriated by a few," i. e., undertakings on a large scale prevail more and more, and economic development tends to bring about a state of things where everything is controlled from one centre.

(2) The Theory of Socialization is closely connected with that of concentration. It asserts that capitalist development will eventually produce all the conditions necessary for bringing about a socialist, or communist, order of economic life. In other words, the theory holds that the elements of the coming economic system are maturing within the frame-work of Capitalism. This theory, which is clearly of extreme importance for the foundation of the realistic standpoint, is of all the teachings of Marx and Engels most characteristically theirs. Separating its component parts, it may be described as follows:

By utilizing improved processes in production in the capitalist organization of industry, it is possible to increase the productivity of the labour of society, and thus develop the productive powers of society. In this way, "by a wise distribution of work, there is a possibility for the first time in the history of mankind-not only of producing sufficient for the necessary subsistence of all the members of society and for setting aside a reserve, but also of giving