THE OTAGO DAILY TIMES SATURDAY, SEPTEMBER 30, 1922. THE PRODUCT OF INDUSTRY.

Otago Daily Times, Issue 18673, 30 September 1922, Page 6

THE OTAGO DAILY TIMES SATURDAY, SEPTEMBER 30, 1922. THE PRODUCT OF INDUSTRY.

“It is our considered opinion,” said the Economist a few weeks ago, “that a very great deal of the industrial unrest of recent years would have been avoided if workpeople had known-the true facts as to wages and profits.” The efforts of professional agitators, generally themselves well paid, have been directed to the creation of an impression among the wage-earners that they are being exploited by the employing class and that there is a large fund of profits out of which the level of wages and the status of the workman might be considerably raised, simply by a process . of redistribution. The existence 'of this impression has had its effect in a lowering of the efficiency of the individual worker. Is the impression, however, one that is well-founded ? Is ~ the division, of the industrial product an arbitrary one determined by one class to suit its own interest or is it a varying one determined by industrial conditions? It is not to be expected that there will be complete agreement upon all social and industrial questions; but, if it were possible that certain fun= damental economic facts could be accepted as beyond question, the fallacy in which a large measure of industrial unrest originates might be wholly exploded. For the purpose of creating an organisation for economic investigation, the findings of which might be generally regarded as trustworthy, the National Bureau of Economic Eesearch was organised in New York in 1920. With thn view of widening the representative character of the. board, and consequently the authority attaching to its findings, various associations, including Hotably the large Labour Federation, were invited each to nominate an additional member of the board. The consequent representative strength and character ef the board, and the technical qualifications of those to whom the details of research were entrusted, lend particular value to the results of its investigation into the distribution of the current income of the people of the United States. The subject was approached independently from two sides—on the one hand ffom data relative to the production of wealth in the country and on the other from data relative to the incomes receivedAlthough much of the mass of information available was fragmentary it afforded desirable for cross-checking, with the assuring result that the two calculations so nearly coincided that for the nlv- years from 1910 to 1918 the average annual aggregate income was estimated at 40,200 million dollars by the one method, and as 39,700 million dollars by the other. The annual figures ranged between 31,200 million dollars and 61,000 million dollars. /Converted, however, into figures of purchasing power at the 1913 price level, the range was narrowed to between 31,700 million dollars and 40,800 million dollars, and in terms of these figures the maximum was found somewhere within the period 1916-17. The per capita income averaged 403 dollars, or in figures of purchasing power* at 1913 price level 360 dollars with the high-water mark in 1916. One of the most interesting results of the inquiry is furnished in a table showing the “division of combined net value product of mines, factories, and land transportation, between earnings of employees, and returns for management and the use of property (including rentals, royalties, interest and dividends),” marked A and B respectively in the following summary:

Commenting upon the result the report says: “The percentage going to employees fell between 1914 and 1916 and rose again between 1916 and 1918. The rapid rise of prices in the first period redounded immediately to the benefit of profit makers. Wages lagged far behind prices in their rise; but they began to rise rapidly and the number of persons employed increased largely after the advance of prices had slowed down. The net result waj that by 1918 the employees in most industries were getting as large a slice of the product as before the war, and in some cases a decidedly, larger slice,” The tabulated returns show that from 66.7 to 77.3 per cent, of the total value

produced during the later period in the industries under examination was absorbed by wages and salaries (the share of the latter being estimated as from sto 6 per cent.). It is questionable how much larger a slice than 70 pei\ cent, of the industrial product may, in their own ultimate interests, bo profitably sought by the employees. In the remaining 30 per cent., after payment of interest, rent, etc., lies the chief source of further accumulations of -capital for the extension and betterment of industry. It is significant that in the year in which the proportion going to management and property reached its maximum—namely, 1916, ywhen it was 33.3 per cent.—the per capita income expressed in terras of the 1913 price level also reached its maximum, as noted above. Moreover, in this year and the immediately succeeding years the totals paid in wages and salaries exhibit a strikingly rapid increase—an increase twice as great as the contemporaneous rise in price level. No less suggestive is the retarded growth of wages over the earlier part of the period when the percentage that accrued to management and property was diminishing. Highly illuminating would be an 1 * extension of the table to show the course of total wages and salaries in the years 1919 and 1920, succeeding the exceptionally steep drop of 1918 in the percentage going to management and property. There is no reason for supposing that a similar research into statistics in New Zealand or' into those of any other country of modern industrial organisation would result in findings conveying a lesson different from that which is to be drawn from the American figures. It was observed last week by Mr Weston, president of the Employers’ Federation, that if all the profits of the employers in the dominion were divided among the workers their wages would not be increased by more than £1 per week. If we may accept the American figures as illustrative of the general distribution of the output of industry, then, as they show that an approximately constant 70 per cent, of the value of the product of industry has accrued to the they suggest that the interests of The wage-earners really lie in increasing national output rather than in using doubtful means in the hope of securing shavings from the remaining 30 per cent. '

Billions Percentage of dollars. Distribution. Year A B A B 1910 .. 7.2 33 63.8 31.2 1911 .. 7.3 2.8 72.3 27.7 1912 8.0 3.2 71.6 28.4 1913 .. 8.7 3.4 72.0' 28.0 1914 .. 7.9 2.8 73.8 25.2 1915 .. 8.7 3,5 71.5 28.5 1916 .. 11.6 5.8 '66.7 33.3 1917 .. 14.4 6.5 68.9 31.1 1918 .. 17.5 5.1 77.3 22.7