Evening star., 1896-08-07

to counteract the general downward ten
dency. The effect was felt rlrst in the
prices OF agricultural products and then in
farm lands and farm labor. In fact. the
decline fell first on unorganized indus
tries and the products of unorsanized la
Dor. There was less resistance in these
industries, and they gave way first
industries operating under the control
or under the influence of organized labor
onered stubborn resistance to a reduc-
tion In prices, and especially to reduc-
ton In wages. And in large measure the
rate OF wages has been kept up in organ
ized and protected industries. but dura-
tion of employment and total earnings,
even In those industries. have materially
decreased. as profits have decreased This
condition OF things has led to combin-
suons OF capital In the form Of trusts and
combines of various kinds to uphold prices
ana increase profits. But in the great
department Of agriculture. embracing 45
per cent Of the entire population. and Civ
impossible. and hence this greatest Of all
industries began to suffer first, and has
thus far suffered most
Not Due to Machinery.
1t Is Idle to claim that any considera BILE
part of this fall in the prices of agricul-
tural products Is due to cheaper methods
OF production. or to improved machinery.
The truth is. nearly all Of the Improvements
in farming implements date back beyond
the period under consideration Almost the
only exception is in the improved self-bind-
er Tor harvesting. So too, most of the
great railway lines were completed before
or IN the early part of the period between
1873 and 1893.
AS rule. farms have gone down with the
1all IN the prices of farm products. Ex-
ceptions to this rule no doubt exist in some
or the newer states, where fertile soils have
been more recently brought under cultiva-
ton. But so great has the depreciation of
hHpn {v, 0e r. la
that what to do with them has become a
serious question.
The important question is, What is the
cause of this fall in prices? Does it arise
demand or from changed conditions of pro-
ducticn? No! Certainly not five per cent
OF the fall Is due to such causes.
Due To the Pricing Instrument.
1t Is due to change in the money stand
ard-in the pricing instrument. In other
words, the change is In the money and not
In the commodities. The change, however,
has come in such disguise that it seems not
to have been apparent to many, and, be-
sides, every effort has been made by those
interested. and by the public press. es-
pecially the great dailes of the east, to
obscure the facts But 1t is none the less
true and none the less diabolical.
But although the disastrous effects of a
disturbance in the money standard fall first
the agricultural class, 1t does not stop
there. The secondary effect Is scarcely less
serious. Better profits On capital and high
er wages for labor in those industries where
organization and the regulation Of produc-
tio1 tend to keep prices up, draw labor and
capital to such industries. But between
1870 and 1880 the population of cities and
towns has increased from 4S per cent Of
the whole to s. per cent, and the country
has lost in the same proportion.
The Shifting Population.
But the transfer of population from the
country to cities must stop at some point.
This point has doubtless been already
reached. AS has been shown by the fall in
the prices of agricultural products. the pur-
chasing power of the farming class has
been cut down by at least one-half; and,
even If prices of the things he would buy
had come down iE the same proportion in
hich his own products have fallen. he still
has little left to buy with, after paying
debts and taxes. His real purchasing pow
er is his surplus after living and paying
what he must pay. Hence. with this enor-
nous falling off in the capacity to buy Of
3O.GOO.OOO people devoted to agriculture, a
seeming surplus of manufactured products
accImulates, industries stop, laborerS are
unemployed and trade is restricted. That
is the condition now.
The plain meaning of all this Is that 3S.-
OOO,OOO of people cannot long continue to
get high wages and reap large profits by
selling their surplus products to 3O,UOOOOO
Of people who have to take low wages and
make no profits. In other words, there
must be. and there will be- leveling down
in these industries; the leveling will be
down and not up, because under present
conditions all things tend downward
There Is no law in economic science better
settled than that capital will flow, and
labor will go, from industries where profits
and wages are low to industries where
profits and labor are higher until an euui-
librium Is reached.
LcveliDg Process.
No tariff and no organizations of labor
and no combinations of capital can perma-
nently prevent the operation Of this law as
long as trade is free within our own bor-
ders. Therefore the products of labor in
organized industries must, in the end,
come down to the level of the products of
labor In other Industries, and capital must
IN the end, also, accept as low profits And
If the products Of labor fall, wages of la
Dor must come down also.
Nor is this the end of the leveling down
process that must go on under existing
conditions. AS prices fall and labor comes
down and profits are reduced, rents must
come down also; and as rents in cities come
down, the value Of business blocks and
other real estate in cities must likewise
come down. This class of property has al
ready gone down in many cities, but it
must go down generally and will 20 down
Rents and Earninxs.
When an improved farm of 100 acres will
not rent for 500. we may be sure that 15x2O
rooms In fourteen-story buildings will not
long rent for 500 either. Rents, In the
long run. like interest, depend on profits:
and as prices fall and profits and wages 20
down, rents must SO down: and as rents 20
down the value Of buildings goes down.
The same Is true of railroads; as every
thing else goes down, rates must go down
n O0 ln,n
But buildings In the cities, like farms In
the country. are largely. mortgaged, and as
farmers who are in debt lose their farms
when the value OF their products 20 below
living profits, so owners of buildings in
cities, when their rents are cut off, cannot
meet interest. and their property goes.
The process may be somewhat different in
the case Of real estate in cities from that
of farms but the end Is the same
Mortgages.
Nor does the reaction end here; real es-
tate In the cities in late years has been
mortgaged largely to insurance and trust
companies and savings banks. When this
class Of property falls below the mortgage
line the security becomes impaired How
near the margin Of safety some Of our life
insurance companies and savings banks may
now be may not be known. A year or two
ago they were insisting upon none but the