THEORY OF PRODUCTIVE EFFICIENCY 167

former command larger wages; in the Southern cotton factories
 the white laborer is found more advantageous than the
negro factory hand, who can be hired at a materially lower
wage. Furthermore, in the same industry and with the same
workmen neither an increase of wages nor a curtailment of
labor time necessarily augments cost. Where a reduction of
hours or an increase of wages succeeds in enhancing energy,
care and sobriety, the output may be greater than before.
Especially where fine machinery is used and a high grade of
intelligence is required to secure the best results, we often
find a true economy in high wages and a lower cost in shorter
hours. . . .

- » + So far as labor is a factor of production, cost depends
not merely upon wages, but upon wages as compared with
output. Under certain conditions there is a true economy in
high wages; the more a workman is paid, the less he may
cost

. « . The true reduction of labor cost of permanent impcrtance
 is that caused by increased efficiency. The more of a
man a laborer is, the better tool he becomes. Whatever society
 does to improve the individual will be more than repaid
by an augmented production of wealth.

Tue Propucrive ErriciENcy THEORY BECOMES THE
BAsis oF AMERICAN INDUSTRIAL STATESMANSHIP
This series of citations could be greatly multiplied by
quoting from other economists. In the discussion of the
principles and theory of economics, the economy of high
wages had for many years been pointed out on the ground
that they were as a rule synonymous with greater productive
 efficiency and reduced costs of operation. The fact that
2 high level of wages and productiveness was accompanied
by rising standards of living and increased consumption of
workingmen, which in turn constituted a market for the increased
 output of industry, had also been commented on by
students of industry. It had also been realized and noted