Labor's Codperative Policy 173 
been created in our economic life. It is recognized, 
first, that high standards of living are based on the 
greater earning power of labor, and, second, that 
continued prosperity and high wages go hand in 
hand.” 
President Grace holds that one of the chief func- 
tions of progressive industrial management is to safe- 
guard the wage rates and earnings of the workers. 
“Even when profits decline or business falls off,” he 
said, “efforts are made to economize in other ways 
than by cutting wages.” 
Only a few years ago wages were the first item 
of expense to be cut when business declined. In 
times of prosperity, also, wages and earnings were 
watched carefully, and, if they mounted above what 
was thought by the managers to be proper for 
workers to receive, a new scale was established which 
promptly brought them down to “normal.” 
Today both workers and managers have come to 
recognize that the end and aim of production is to 
produce goods that will sell, and not be piled up in 
warehouses and stores, and that high employee earn- 
ings per year may actually mean low labor cost per 
piece, and, consequently, low prices, large sales, and 
large profits. 
Workers today, better than ever before, under- 
stand that wages must be in a fair and just relation 
to production. Wages are far the largest item of 
cost in the production of most goods. If wage rates 
per piece are disproportionately high in any industry, 
the total cost of production in that industry will be