are also sure that a large part of what is spent for food ought to be classed under the head of luxury, not of living. The cost of living, then the cost of the simple articles of wholesome food, comfortable shelter, and decent clothing-is a matter of the most vital importance to the ordinary working-man's family. It is a matter of utter insignificance to those whose income runs up into the tens-not to say hundreds of thousands.

In every society at a given time there are certain productive forces in existence, which are ordinarily classified under the heads of land, labor, and capital, with sometimes a fourth category called "organization." organization." It is by the application of these forces that all wealth is produced. Broadly speaking they can, in process of time, be diverted from the production of certain forms of wealth to that of other forms. The theory is, that the forces of production will be utilized in those directions for which there is the greatest social demand.

This is undoubtedly true. Yet it must be recognized that the demand which governs the use of the productive forces is what the economists call "effective demand," which is represented by the ability to buy. The productive forces of society are utilized in the way desired by those who have the money to pay for the products of industry. And the desires of those who have large amounts of money to spend are likely to be widely at variance with those of the " average workman." When it comes to determining what sorts of goods are to be produced, the " voting," as in the semi-feudal forms of democracy, is on the basis of property, not of persons.

It is a familiar phenomenon of modern civilization that the gulf between the so-called poor and the wealthy is getting ever wider. The maximum incomes are vastly in advance of anything which was dreamed of a generation ago. The group of those who count their wealth in seven figures is enormously augmented. But the dead level of existence of the working classes remains relatively unchanged. It is not necessary to seek for the causes of this development in the growing power of capital, in the growth of a world market, in the centralization of industry, and in the concentration of economic opportunity through the accumulation and inheritance of wealth. It suffices

for the present purpose to note that this divergence exists, and is getting ever greater. The essential bearing which it has on the present discussion is in its effect on the demand for different classes of commodities.

For this purpose, we need to make a broad grouping of commodities into necessaries and luxuries. The former are essential for a living, the latter for elaborated pleasure and enjoyment. Now it is evident that the same group of productive forces cannot be employed at the same time in the production of both necessaries and luxuries. The proportion in which they will be divided between the two employments will depend on the relative demand for the one or the other, as expressed in the money offered for one or the other class of products. And the significant fact is that the bulk of money to be offered is concentrated in the hands of a very small group of people. The entire income of five million wage earners receiving six hundred dollars a year each would be equalled by six thousand men with an income of half a million, or three thousand men with an income of a million. Counting in a few men whose incomes run up into many millions a year would reduce the number rapidly. So that the determination of the kinds of goods which are to be produced rests with a very small percentage of the total population.

It is evident that the amount of the necessaries of life which can be consumed by an individual, be he rich or poor, is strictly limited. The rich man and the poor man alike must have the necessaries. But when they have been secured, the rich man's income has scarcely been touched, while that of the poor man is entirely gone. There thus remains in the hands of the rich man a large surplus of income for which some object must be found. This object lies in the realm of luxury, and the rich man at once voices an "effective demand" that his desire for luxury be gratified. This gratification involves the removal of certain productive forces from the creation of necessaries to that of luxuries. Thereby the amount of necessaries is reduced, and the relative cost of securing them is advanced. This advanced cost, to be sure, affects the "living" of the rich man as well as that of the poor man. But it makes little difference to the rich man. If he has to spend ten per cent. of his income for his living, in

stead of five, it is a trivial matter provided he can have his luxuries. But to the poor man it makes all the difference in the world. It took his all to secure his living before; now there must be a heart-breaking retrenchment somewhere. The old saying that whoever discovers a new want is a benefactor of the human race does not ring true in the ears of the wage-earner.

This, in a schematic way, describes the process by which, as the wealthy and leisure classes have grown, and the power of capital has increased, the common, wage-earning groups have remained at approximately the same level. It explains, in part at least, why the cost of living has remained so high in the face of all the economic marvels of the past century.

It is perfectly obvious that if all the productive forces now at work in the United States were turned to the creation of necessaries there would be a superabundance for all. It is also perfectly obvious that such a condition of affairs is impossible, while there are widely separated economic classes, the desires of which, and the purchasing power of which, are as widely separated as the poles.

There must always be a sufficient number of laborers employed in the production of necessaries so that the price of the latter will allow the working classes to maintain a fair degree of economic efficiency, and keep up their numbers, on the prevailing rate of wages. But the laborers over and above this number will be employed in the production of comforts and luxuries which they and their fellows can by no possibility buy. This statement bears with it a most unwelcome suggestion of the discredited iron law of wages. Yet there seems to be no escaping it.

Any statistical demonstration of the foregoing propositions can hardly be looked for. The forces are not such as lend themselves to statistical treatment, especially as the figures of prices and products given by the Government authorities make no distinction between necessaries and luxuries. Yet there is an abundance of statistical illustrations which are sufficiently illuminating.

The first of these is found in the disproportionate growth of the city population as compared with that of the country. We know that in general the agricultural occupations deal primarily with the production of necessaries, while the urban occupations

are likely to produce luxuries. In this connection it is significant to note that during the thirty years from 1880 to 1910 the urban population of the United States increased from 29.5 per cent. of the total to 46.3 per cent., while the rural population declined from 70.5 per cent. to 53.7 per cent.

That this has had its effect on the per capita production of some of the necessaries of life is well illustrated by the figures of farm production furnished by the last census. During the ten year period 1900 to 1910 the population of the United States. increased by 21 per cent. It might reasonably be hoped that the production of the necessaries of life would at least keep pace with this. But the figures of farm production show that during a ten year period nearly corresponding (that is, from 1899 to 1909) the amount of butter produced increased by only 8.6 per cent., and the amount of cheese by 7.4 per cent. The quantity of eggs produced increased by 23.0 per cent., but their value, expressed in terms of money, increased by 112.6 per cent. The number of pounds of wool produced increased only 4.6 per cent., while its money value increased 43.4 per cent. The number of bushels of all the cereals produced increased by 1.7 per cent., while the value increased by 79.8 per cent. The amount of wheat increased by 3.8 per cent., while its value increased by 77.8 per cent. And in the case of corn, while there was an increase of 73.7 per cent. in value, there was an actual decrease of 4.3 per cent. in quantity. In the case of potatoes, there was a marked increase in amount-42.4 per cent.-but the increase in value was even greater-69.2 per cent. The amount of cotton produced increased 11.7 per cent., and its value 117.3 per cent.* Unfortunately similar figures for meat products are not given. But a statement from the Department of Agriculture has recently been quoted to the effect that within the last six years there has been a decline of more than thirty per cent. in the number of beef cattle in the United States.

*It is true that these figures have been called in question, the statement being made that 1899 was an exceptionally good year, and 1909 an exceptionally bad one. Yet it seems incredible that so marked a change as this could have escaped attention at the time if it had been the result of sudden fluctuations, rather than of a gradual development. Nor do the index figures of prices of food stuffs for 1899 and 1909 show any irregular variations as we should expect if this statement were correct.

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Another significant comparison is that between the index prices of food and of commodities in general. Both have risen during the last few years, but at a very different rate. According to the figures of the United States Bureau of Labor the index number of the wholesale prices of 257 commodities in 1911 had risen to 129.3, taking the average of the ten year period 1890 to 1899 as 100. But the retail prices of fifteen articles of food, which represent approximately two-thirds of the food expenditure of a working-man's family, or something like one-third of the total expenditure, show a rise in the index number from 100 for the period 1890 to 1899 to 143 (weighted average) in 1911. It is clear that a compensated dollar, arranged on the basis of the index number of the wholesale prices for 257 commodities, would not solve the high cost of living problem for the working

man.

Still another suggestive item is furnished by the census returns in the statement that the value of the automobiles manufactured in this country in 1909 was nearly $250,000,000 as against a little over $30,000,000 in 1904.

Illustrations of this sort might be multiplied to show that a large and increasing proportion of the productive forces of this country is utilized in the production of luxuries rather than of necessaries. Of course, as stated above, illustrations do not constitute a statistical demonstration. But fortunately such a demonstration is not necessary. We can see it on every side in the contemporary life around us. The capital which is employed in making automobiles cannot be used in raising wheat and steers; the labor expended on a million dollar mansion cannot also build two-family apartment houses; and the man who is teaching Sanscrit to erudite post-graduates cannot at the same time instruct ambitious working boys in the industrial arts.

As long as conditions exist whereby a few have incomes vastly in excess of their needs for a living, while the many have the barest margin above living expenses, life is going to be hard for the many, and no amount of technical improvements in the industrial arts will ever avail to make it easy. For the more efficient the means of production become, the smaller will be the proportion of all productive effort which is devoted to the