4

INDUSTRIAL REVOLUTION AND WAGES

sities and comforts of life. Prosperity, as a consequence,
was contingent upon further improving these living standards,
 as labor would consume more if it could produce
more and receive higher compensation. The Secretary of
Commerce and those of kindred views, therefore, advocated
 the elimination of waste from industry, the standardization
 of output, the increased use of machines to
extend mass production methods and to reduce labor and
other costs of production. Under these conditions wage
rates might be indeterminately increased, labor and other
costs, as well as prices to consumers, reduced, and at the
same time generous margins of profit maintained.
As a result of the influence of these revolutionary suggestions,
 the present era of unprecedented prosperity was
begun and developed. Industrial leaders and financiers,
as well as heads of labor organizations, accepted the new
enlightened and far-seeing attitude as to industrial policy.
The new proposals were enthusiastically applied. It was
also clearly evident, because of the impoverished condition
of European countries at the time, that the United States
could not hope to sell its surplus products abroad in sufficient
 quantities to absorb the actual or potential output
of its mills and factories. It was, therefore, realized that
reliance must be placed on the domestic market, and that
to expand domestic demand, wages or purchasing power
must be increased.
Old wages, theories, and standards were, therefore,
scrapped along with obsolete machinery and methods. The
productivity principle of wage determination became dominant.
 Money rates of pay and real wages within a few
years advanced to the highest point in the country’s history.
In the pressure, however, of the extraordinary industrial
development which occurred, no general, practical method
was worked out for guaranteeing to labor a definite share