THE OUTLOOK AND INDEPENDENT, December 19, 1928. Volume 150, Number 16. Published weekly by The Outlook Company at 120 East 16th Street, New York, N. Y. Subscription price $5.00 a year. Single copies 15 cents each. Foreign subscription to countries in the Postal Union, $6.56. Entered as second-class matter. July 21, 1893, at the Post Office at New York, N. Y., and July 20, 1928, at the Post Office at Springfield, Mass., under the Act of March 3, 1879. Copyright, 1928, by The Outlook Company.

Looking Forward

Two THINGS, in this issue,―aside from James Truslow Adams's query about the future of our mass production commercial fabric-stir the imagination and evoke dramatic pictures of life as it soon may be on this planet.

ONE IS THE extraordinary invention shown in Rochester, New Yorkthe new device for setting type by telegraph so that a single typist may put into automatic and simultaneous operation in a thousand widely scattered newspaper offices a thousand linotype machines; thus, in effect, printing from a distance at one stroke the thoughts or actions of men as they are reviewed or expressed. The other is Santos Dumont's completion and test in Brazil of his "Martian transformer," a device weighing two pounds, which permits man to walk great distances with so little fatigue and such an increase in speed as to approach the art of flying as the crow flies.

BOTH THESE machines reinforce the view now widely held that increasing changes by science and machinery are inevitable in our civilization. No matter what different forms of social or industrial control humanity may try in its effort to secure collective happiness in the future, man will never discard the machinery and implements which scientific invention has put in his hands. The old, purely agricultural and trading world is fast altering, never to return. It may be that it is only a temporary condition which permits the industrial city to draw more and more wealth, population and power to itself, at the expense of the rural district. But the machines and implements and newly controlled forces extracted from nature are here for all time.

SUCH QUESTIONS as Mr. Adams raises must some time be settled-possibly soon. When they are, political lines may dim, new states may rise which will be definitely economic in their aims, their thinking, and their structure, constituting a world the like of which men have never seen. But the basic foundation upon which future civilization will rest will inevitably be science and the machine.

Francis Profers Bellamy

and Independent

December 19, 1928

of the chief statistician of the National Industrial Conference Board. The country, he says, is in the grasp of a "prosperity complex" which has been insidiously built up in the past few years. Prosperity has been largely a state of mind, "an illusion created by extraordinary financial conditions, by exceptional activity in producing certain types of goods, by radical changes in the organization and methods of manufacture, by changes in methods of distribution, and by shifts in living habits." Any one who has kept his head in the recent amazing whirl must acknowledge the truth of this sober statement.

Many fundamental industries, for example, such as agriculture, sugar, rubber, textiles, coal, ship building, railway supplies and, to a considerable extent, transportation, so far from having been prosperous have been notably unprosperous. Both the capital and labor employed in these vast industries have not shared in what has been claimed to be the astounding prosperity of the

country as a whole, although owing to competition with the high-wage massproduction industries, labor has fared better than capital.

Even in the industries which are supposed to have been prosperous the illusion has been due to the spectacular rise of certain individual companies. These companies, commanding enormous aggregates of capital, capable of spending unlimited sums for expert staffs in research laboratories for cutting costs and with other resources of modern superhuman business have prospered enormously at the expense of their smaller rivals. The stocks of these great companies are listed on public markets. Their monthly or quarterly reports are "news." We hear of their regular and great increases in earnings. We watch their stocks soar to 200, 300, 400 to be "split up" two or three for one, and the new stocks continue the soaring process until some of them are now selling at from $800 to $2,000 a share for their capitalization of a few years ago.

It is very impressive, but we hear nothing of the fortunes of their smaller competitors, who have been anything but prosperous. I have in mind one moderate sized company which had been prosperous until a couple of years ago. One of the supercompanies decided to manufacture the same product that this company had been making. The smaller company found itself helpless in has been lost. But the stocks of competition and its business these smaller companies are for the most part closely held.

They are too small to be speculative footballs, and their reports are not news. The public is not interested in them. Once in a while they acquire a spokesman to tell of their ills and we then learn that even in what have been supposed to be the prosperous lines of industry, prosperity has been strangely limited.

Just as I write this paragraph my attention is called to the prophecy in today's paper by that veteran business observer and prognosticator, John Moody, that we are about to enter on a great period of prosperity, a period in which there will be "a redistribution of prosperity, assuring profits for the small merchant and manufacturer as well as the large corporation." Whatever we may think of this statement it indicates that in the past few years in what the National Administration has been dinning into our ears as the greatest prosperity the world has ever seen, the small men and companies have not been prosperous.

Again, new methods of merchandising have given the illusion of far

greater prosperity than has in fact existed. Chain stores of all sorts have cut deeply into old methods of retailing. The most important of them have their stocks listed. In the past few years the advance in the prices of these stocks has been phenomenal. We read of the hundreds of millions the companies are earning, and see the hundreds of per cent at which their stocks are selling. But, again, we hear nothing of the literally thousands of small stores which have been closed up by the new competition of these giants. Ask thousands of corner tobacco shops, neighborhood druggists, notion shops and corner grocers if they have been prosperous.

To a considerable extent, the public balance sheet of American prosperity has had written on it only the profits and not the losses. No one has wanted to hear anything but prosperity propaganda. America is on a prosperity "jag." As reflected in statistics, the country is no more prosperous in 1928 than it was in 1927 and 1926 and in some respects it is less so, yet the prices of stocks have doubled in the past year. To note a recent casualty, the head of a corporation whose stock was quoted at $3 a share took the trouble to inform the public that there was nothing in the company's condition or prospects to warrant so high a price. The answer of the public was to whirl the price up to $28. A few days ago the stock had to be suddenly stricken from the stock list and given first aid until it could be reinstated. A stock which had never paid a dividend has been selling at over $400 a share. There are plenty of wildly speculative stocks selling to yield less than Liberty bonds. In the past year and more, whenever the market has shown signs of returning sanity by declining, either President Coolidge or Mr. Mellon has issued an optimistic statement in the way of a hypodermic injection and the rise has started again, until now the public has become as wild as the market itself. In November the rise in the market value of stocks on the New York Stock Exchange alone was nearly four and a half billion dollars.

IGNS OF THE TIMES may be read in

S the sort of financial advertisements one reads. A short time ago I noted one which invited subscriptions of $10,000,000 for a "holding company." I recognized none of the names of the directors. There was no bank named as depositary. The public was asked

to subscribe its ten millions for what was practically a blind pool and to send in the money to an individual named as treasurer. More recently I have seen even worse advertisements, worse because highly reputable names have been attached to them. Whatever we may say of prosperity in other quarters in America, that in Wall Street at present is obviously factitious. It is no longer a problem in economics but in abnormal psychology. We are told that the country is on a permanently altered level of investment return. I recall not many years before the panic of 1907 that the usually silent leader in American finance at that time made the same remark.

or the population making a market. The theory further holds that you can raise wages without raising, indeed even lowering, the price of the finished products, if you can produce them in enormous quantities so that economies in production will allow for wage advances. To effect these economies, you must produce standardized products, requiring no change in machinery. If instead of twenty sizes, shapes or colors, you produce only one, the saving in many ways is enormous. Theoretically the larger the production, the larger the saving.

or

stock market of that day was justified because America was on “a permanent four per cent level." Ten years later I had the privilege, of which I availed myself, of buying United States Government bonds to yield 6%.

However, even if some important industries have not been prosperous, if even in the prosperous industries a considerable proportion of the plants have not shared in the flushness of the time, and if on the whole there has been nothing like the great and diffused prosperity that the ballyhooers would have us believe, nevertheless there is no question that a great deal of money has been made by the American people. Even the most sceptical is staggered by the figures for expenditures, for savings banks and for life insurance. Savings deposits, for example, increased nine and a half million dollars between 1921 and 1927. As for expenditure, it is obvious on all sides.

TH

HAT there should have been a sudden prosperity after the war was to have been expected, as was the temporary slump in 1920 and the continued prosperity afterward. Based on the so much scorned historical parallels, American postwar industry was running true to historical form until about 1926. But American prosperity was not wholly of war manufacture in its totality. There has been behind it also the new theory and practice of high wages and mass production. The theory is ingenious and for a while, at least, the practice has been highly profitable.

The theory, briefly, is that if you raise wages you will increase consuming power among wage earners and thus create new markets. If, for example, we could double wages, it would be equivalent to doubling the market

power. Sales did increase enormously. Production in certain standardized lines increased so greatly that higher wages could be paid, these higher wages went into more purchasing, and so the "ring around a rosy" continued. It seemed as though we had found a pleasant and profitable way of lifting ourselves by our own boot straps. Engaged in this pursuit for the short space of about seven years, we have been the wonder of the world. People travel from the ends of the earth to look at us, like acrobats in a three-ring circus. We were engaged in building a Utopia where everybody would be rich. If you raised wages, you increased consuming power; if you did that, you increased the mass of production; if you did that, you could so reduce the other-than-labor costs that you could raise wages again. It was marvelous in our eyes. Theoretically we were headed for the point at which wage-earners would be getting unlimitedly big wages for their production and paying infinitesimally small prices for what they consumed. It has been, perhaps, the nearest glimpse of the Promised Land that has ever been vouchsafed to business men.

But troubles appear to be developing. For one thing, though the business men are not much concerned about that, there are whole classes in the population whose incomes cannot be raised proportionately, the "white collar” workers and those not engaged in producing things of a sort capable of mass production-things like poems and pictures and thoughts and theoretical science. These classes, as consumers and even as human beings, are getting out of adjustment with American life because their incomes are not growing appreciably, whereas they have to pay