THEORY OF PRODUCTIVE EFFICIENCY 101 
expect to bring the millennium within a day. But we do 
sincerely feel that our position is a step in the right direction, 
an effort at laying the foundation for the establishment of 
cooperation that ultimately will bring economic justice and 
fair play, not alone to the workers but to humanity itself. 
This agreement constitutes one of the most significant 
precedents in the modern labor movement. It frankly 
recognizes the productive efficiency theory of wage deter- 
mination and makes it the basis of economical accomplish- 
ment through the joint efforts of management and of 
organized labor. In addition to accepting the principle 
it also provides practical methods for the distribution of 
revenue gains. Experience under its provisions will un- 
doubtedly have a profound effect upon wage relations in 
the organized labor movement, 
Practical ErFFecTs iN Basic INDUSTRIES 
The complete acceptance of the productive efficiency 
theory during the past five years by the business and indus- 
irial world has been attended by undreamed-of results. 
There has been a remarkable expansion in industrial out- 
put, which has been accomplished by fewer wage-earners 
and by a lowering of labor and other costs of production, 
Output per employee and per man hour, as well as rates 
of pay, have greatly increased. Alongside of this unusual 
performance there has also been a steady advance in the 
general margin of profit. These unprecedented results 
were forcibly summarized by the United States Depart- 
ment of Commerce in 1926 as follows : 
One of the most important facts in regard to American 
industry is its ever increasing efficiency. During the first 
quarter of the present century the number of wage-earners 
in our factories increased about 88 per cent, while their 
_ L“Commerce Yearbook, 1926,” Vol. T.—United States: United States De. 
partment of Commerce: pp. XIV-XV