LOWER COSTS AND HIGHER WAGES 200

heing equal, result in higher profits to him because of reduced
expenses.
Since the war, however, a new theory has been more and
more often advanced, which may be briefly stated as follows:
[f wages are reduced, the purchasing power of wage-earners
is reduced with them. Therefore, considering the industry of
the country as a whole, lower wages mean smaller sales,
higher wages mean larger sales. In order to find a market
for their products, industrial managers must maintain a wagescale
 which will permit wage-earners in general to buy those
products. . . . As a very intelligent lady of my acquaintance
remarks, the joke seems to be on the capitalist. After supposing
 for a century or more that his profits were being cut
down by the increasing demands of his workmen, who by
trade unions, “soldiering,” and other devilish devices compelled
 him to pay them more and more compared to the work
done, the capitalist has now discovered that the workmen
were right after all, and that the road to bigger profits lies
through higher wages.
1f this be true, it would indeed seem that the millennium is
at hand. Quite naturally, the workmen want a high wagescale.
 It now appears that the employer wants the same
thing. What could be more sweetly harmonious? . .. Will
the present new era, in which the capitalist lion and the wagecarning
 lamb are to lie down together under the spreading
branches of the high-wage tree, likewise prove to be the
old era after all? Will the slogan “high wages and big consumption”
 prove permanent, or is it one of those business
shibboleths which run from mouth to mouth until their. career
s cut short by the merciless logic of events? . .. We have
>efore us certain patent and incontrovertible facts: First,
wages in general are higher than ever before, not only in cash
but in purchasing power, have been higher for half a dozen
years, and, aside from minor reactions, appear to be still on a
slow up-grade. Second, the total volume of production in the
United States is far greater than ever before. Third, prices