beyond the narrow circle of the home and the workshop, and spread over the whole industrial community, reaching even to the extremes of the earth. Under a system of exchange, each man no matter where he The results may be produces according to his natural or acquired aptitudes of exchange. and according to the facilities offered by the region which he inhabits; he devotes himself entirely to one kind of labor, and always puts the same product on the market, with a certainty that the ingenious arrangements of exchange] will permit him to receive in exchange any other objects that he wants. It has often been remarked that the things which any one of us consumes in a day, are the combined result of the toil of hundreds or perhaps thousands of workers who are united one to another by invisible but none the less real bonds of association. Questions on the foregoing Readings 1. Under what circumstances would it be uneconomical to increase the product of, say, a manufacturing plant? 2. What does Adam Smith say concerning the relation of the division of labor to the extent of the market? 3. Name some sorts of industry which can be carried on only in a large town or city. 4. Explain the relation of water-carriage to the market. 5. Why was the American market a relatively narrow one at the time that Adam Smith was studying the relation of the market to the division of labor? 6. What was the first important railway in the United States? 7. When was this railway opened to traffic? 8. Describe the first steam locomotive used by this railway. 9. What was the effect of the opening of this railway upon the exchange of products? 10. What is necessary to the effective exchange of products besides the division of labor and the development of transportation? II. Describe the manner in which barter clogs or embarrasses the exchange of products. 12. Name some commodities which at different times, and in different countries, have been used as money. 13. Why are metals more suited to be used as money than are other commodities? 14. Give an example of how money facilitates exchange. 15. Define price. 16. What is the importance of a common measure of objects? 17. How is value measured? 18. Name an important cause of the growth of cities. 19. What is the importance to urban dwellers of an efficient provision market? 20. Describe briefly the provision market in Chicago. 21. Describe the functions of the "6 buyer for this market. 22. What arguments were once advanced to prove that exchange is not a productive process? 23. Explain how exchange enables us to utilize wealth which would otherwise remain unused. 24. Explain how exchange enables us to utilize in the best way a host of productive capacities which without exchange would remain inactive. 25. What is the relation of exchange to the division of labor? CHAPTER IX DISTRIBUTING THE INCOME OF INDUSTRY lem of distribution has become important 49. Distribution previous to the Industrial Revolution 1 The most difficult, as well as the most important, problem in The probthe whole field of economics is unquestionably the distribution of wealth. Ever since men began to combine in production there must have been some question as to what share of the joint product each was to get. But though the problem of distribution is an ancient one, it is only since the Industrial Revolution that it has become of overwhelming importance. As recently as colonial times, indeed, the problem was not generally of great importance, as the following description of a colonial farm will show: only since the Indus trial Rev olution. nial farm was practi cally selfsufficing. In colonial times there was very little trading. The roads were The colofew and in poor condition. There were no railroads and no opportunities on many of the farms to make use of boats and water transportation. People had to be independent, that is to say, self-sufficing. The farm was not merely a place for raising live stock, poultry, grain, vegetables, and fruit; it was also a manufactory of almost everything needed in daily life. The farmer and his family produced the raw materials and also made them into useful articles. articles Generally speaking, these articles included: (1) Wearing apparel Types of and household textile supplies; (2) household implements, utensils, made. furniture, necessities, and comforts; (3) farming implements, building materials, and general supplies. A few things were purchased from occasional traders who came to the farm. A few things were purchased in the towns on the infrequent visits of the farmer to the more densely settled districts. Thus the scythes were made at the forge, and only the handles were made on the farm. Saws and axes were imported from England, or later from those regions where iron 1 From the Department of the Interior, Bureau of Education, Lessons in Community and National Life. Washington, 1918. Series B, pp. 17-24. The home manufacture of furniture and agricultural implements. Other manufactures. The making of clothing by the farmer was abundant and easy to secure. Not all metal articles were imported. The soft pewter metal which went into the forks and knives could often be worked into household utensils in the domestic factory the home. . . . ... The first settlers brought some furniture from Europe with them, but as they migrated inland it proved to be too bulky to move, so that the inhabitants of each new settlement were compelled to make within their homes such articles as tables, stools, cupboards, and bedsteads. The farmer not only made his house and furniture from lumber, shingles, and nails of his own manufacture, but he had to make the implements with which to work his farm. These consisted of vehicles of transportation, plows, harrows, pitchforks, handrakes, shovels, ax handles, hoe handles, scythe-snaths, singletrees . . . and harness for his horse, if he chanced to have one. All manner of makeshifts were often necessary to supply some of these articles. For example, horse collars were made of corn husks; hames of crooked roots; clips, clevises, and laprings of hickory withes; ox yokes of bent hickory wood; traces and bridles of twisted deer hide, and pitchforks from forked boughs or antler horns. . . . ... Besides making the implements with which to till his farm, the farmer and his boys had also to make the tools with which the products of the farm were brought into condition for use. They made their own cider mills, cheese presses, spinning wheels, flax brakes, swingling knives, wool combs, looms, and implements used in making hominy and bread. . . . The hides of animals killed for food on the farm, or of the deer, squirrels, raccoons, rabbits, beavers, and foxes shot or trapped in the woods, were used for many purposes. Deerskins were made into hunting shirts, breeches, coats, leggings, and moccasins. Gloves and mittens were made from the skins of squirrels and beavers, caps from the skins of raccoons, bears, foxes, cats, rabbits, and woodchucks. Bearskins were made into beds and bedding. From the deerskins and cowhides, moccasins, shoe-packs, and shoes were made. The preparation of the material and the making of all of these articles were done on the farm, the work being the duty chiefly of the men and boys. . . . ... While the farmer and his boys were busy supplying leather clothing, and his the wife and daughters were manufacturing cloth to be used for family. wearing apparel and as household textile supplies. Cloth was made from cotton, wool, or flax. The making of these involved the preparation of the raw material for the spinning wheel and loom, and bleaching and dyeing the finished products. . . . 50. Distribution since the Industrial Revolution 1 Under the conditions described in the preceding selection the Distribuproblem of distribution was relatively unimportant. The farmer tion relatively and the various members of his family coöperated in the production simple of many goods, yet the distribution of the joint product was an easy matter. under colonial In the first place, relatively few persons were involved. conditions. In the second place, the fact that these persons were bound together by family ties rendered easy a just and peaceable distribution of the products of their joint labor. But since the Industrial Revolution, fewer and fewer individuals, (or small groups of individuals), have continued to be self-sufficing, and more and more persons have become involved in the complex division of labor. This change has brought many benefits, but it has also rendered more difficult the just distribution of wealth produced jointly. The problem of distribution since the Industrial Revolution is briefly outlined by Professor Carver in the following passage: Effect of the Industrial Revolution upon the problem. defined, The problem of the distribution of wealth is the problem of dividing The the products of the industry of the community among the various problem classes. The claim of each class to a share of the wealth is usually based upon the claim that each has contributed something to its production. The contribution may be labor, either mental or physical; it may be capital, or the results of foresight or investing; or it may be land which the owner has appropriated or otherwise come into possession of. . . . We are sometimes told that most goods are socially produced. This is a rather impressionistic statement; it may do no harm, but 1 From Thomas Nixon Carver, Principles of Political Economy. Ginn & Co., 1919; pp. 365, 381-383, 385. |