The Kaiserin, her eyes bathed in tears, threw herself into the arms of Frederick III, and both of them, standing thus in a long embrace, gave full vent to the tears they had heroically held back so long. The entire household then passed before the new Kaiser. When Sir Morell Mackenzie passed before him, Frederick III seized both of his hands, and drew him to the little table, where he had signed his accession to the throne. Here he wrote again: "I thank you for having caused me to live long enough to recompense the splendid courage of my wife."

One hour later, all the lights were put out in the White Villa. The tragedy of San Remo was over-that of Berlin was about to begin.

I have related this tragedy just as I had seen it, and as my uncle had noted it in his account. I do not know whether "all kinds of obstacles were placed in the ex-Kaiser's path to keep him from his father's side"; but I do know that he did not try very hard to remove these obstacles, and that, to the astonishment of all, he came to San Remo not as a loving son anxious over the condition of his dying father, but as an heir desiring to know how much longer he might be obliged to wait before he could enter into his heritage.

I do not know whether, "among the group of observers, an infamous campaign of organized slander was launched in the newspapers" against him; but I do know that some of these observers, gazing upon the accomplishment of the most regrettable of tragedies under the most beautiful of skies, were sadly struck by the fact that, despite the courage and energy of the splendid woman who held the fortress at the White Villa like a man, her son, a man in the full vigor of his youth, acted with the vanity and pusillanimous ambition of a woman.

"A Kaiser has no friends," William II remarked to Theodore Roosevelt, when the latter visited his court. "He is pitiless." We may add that a Kaiser, apparently, has no relatives-he is heartless!

STEPHANE LAUZANNE.

THE FUTURE OF BRITISH INDUSTRY

BY B. SEEBOHM ROWNTREE

In every industrialized country we may roughly test the progress of industry by asking two questions: First, are Capital and Labor fully and efficiently employed? Secondly, is the worker's standard of life gradually rising? In discussing these questions, let us first consider purely economic developments, and then go on to the more human elements.

I do not propose to analyze at length the economic situation as we find it to-day. Probably, however, we all know that the productive power of the world has so greatly increased as a result of the war that production has outrun consumption. Of course, when we say that, we only mean that production has outrun the power to consume at a given price. Directly after the war, people began expanding their factories, not in Great Britain only, but all over the world, laying down plants far beyond what was needed to supply the possible demand. We were passing through a period of fictitious prosperity. Employers were well off, and workers were well off. They had been paid during the war out of capital, and there was a shortage of goods. Thus, with wealthy people on the one hand and a shortage of goods on the other, the natural result followed. Consumers clamored for the goods-they did not much mind what they paid for them, and there was a tremendous boom in trade. We had rising prices, and rising profits, and both employers and workers got into very bad ways. They imagined that they could maintain prosperity without the condition essential to fundamental prosperity-namely, hard work. It was easy to make money in 1919, and we confused making money with the actual creation of fresh wealth, or establishing a pull on the world's wealth. Now the bubble has been pricked. Directly prices began to drop, the depression began, and it descended like an avalanche. Many people saw prices dropping; and refused

to buy one day because they thought to-morrow they would buy cheaper. They still think that, and they only buy what is absolutely necessary. Now, of course, many others cannot afford to buy, and the longer the depression lasts, the larger will be the proportion of these people. The only way in which we can reëstablish industry is to lower the cost of the articles we are selling. There is no other way, and that truth holds good not in Great Britain only but in the whole world. Now comes the question-how can we do it?

There are four possible ways: (1) to lower the overhead expenses in business; (2) to lower the price of raw materials; (3) to lower profits, and (4) to lower the cost of labor. Let us review them briefly.

We can do something when once we get busy, in lowering overhead expenses, though we cannot do it very substantially until we are actually busy. In every large factory there is an enormous overhead outlay, which goes on whether we are working at half speed or full speed or more than full speed. But although we cannot avoid certain parts of it, we can make economies here and there. By more careful planning, we can do with less stock, and turn our capital over more frequently. By careful costing, we can see that waste is eliminated-waste of power, for example, and waste of steam. But when all is said and done, the amount we can save is limited, and in any case such improvements as I have indicated can only come gradually. Then there are raw materials. Supposing we could obtain our raw materials more cheaply, it would be possible for us to sell our product at a lower price, but the raw material of one industry is the finished product of another. Sugar, for instance, is the raw material of the chocolate manufacturer, but it is the finished product of the sugar refiner. Similarly, iron and cotton are the raw materials of many industries, but the finished products of others. Therefore, since, throughout the whole world, producers of raw materials and producers of goods in their final stages of manufacture are equally suffering from the present trade depression, we can find no solution of our present problem by passing it on to some other party in the same danger as ourselves. Of course, we may really effect something positive by

the application of science. If we can make two blades of grass grow where one grew before; or manufacture something by synthetic means which is at present obtained at high cost in some other way, we can get a reduction in the cost of our raw material. But anyone who has undertaken chemical research knows that this is a slow and costly process. We must work at it constantly, for it is very important, but it is no immediate solution of our present problem.

Then there are profits. Can we get very much out of profits? We have to remember that to-day we have a buyers' market, not a sellers' market. The employer cannot determine the price at which he is going to sell. The buyer has the upper hand, and every employer is anxious to sell even at a very narrow margin of profit, or even at no profit at all so long as he can just turn over his capital. While, then, in a time of trade prosperity, like 1919, it was possible to effect a saving by lowering profits, it is impossible to do so to any extent in a time of trade depression such as this.

There is a good deal of careless thinking on the subject of profits and great play is made by a certain class of writers and speakers, of enterprises which are very successful, but little is said of those which fail. It is well that we should remember that profit is not something stolen from the workers, but it represents the rent paid for the hire of capital, and that an adequate supply of capital is essential to industrial prosperity. It must be remembered that no industrial enterprise can continue for long that is not making enough profit to keep it from becoming financially anæmic. Such a condition is opposed to the interests of Labor just as much as of Capital, for it checks all development, and thus restricts the demand for labor. Now capital in itself is a dead thing. Just like plums, or eggs, or anything else, we go into the market and buy it as cheaply as possible. Its price is mainly regulated by supply and demand, and we need have no compunction at all in getting it as cheaply as we can. But we must have capital under any scheme of industry, syndicalism, socialism, or capitalism. The question we have to ask is whether the price paid for it at the present time is excessive. Here we must strike an average. One company

perhaps is making 60 per cent. But in another company the whole of the capital is lost. We must weigh these two facts against one another. Supposing the means of production were nationalized, the nation would have to bear the losses as well as get the profits, and the question is whether after having borne all the losses, a nationalized industry would obtain capital any cheaper than it is obtained to-day. I do not know what the answer is. It would be a very interesting investigation. We must face facts with regard to this as with everything else, and recognize that we can only get capital either by hiring it, in which case we must be prepared to pay at least the lowest reward for which people will save, or else by making industry provide its own capital as it goes along. In either case, the provision of the necessary capital will figure as an item in the cost of production. So we come to our last item—namely, labor cost. Let me make it quite clear that when I refer to labor cost, I am not necessarily referring to wages. What an employer pays for is not so many men, or so many hours of a man's time. It is so much productivity. What the employer has to watch is the total cost of his labor in the manufacture of an article. If we leave the productivity of the workers as it is, without attempting to increase it, we can only get industry going again by bringing down actual wages. There is no way out of the impasse. We cannot sell our goods at present prices. Therefore, we must reduce our price, which involves reducing labor cost; and if the productivity per man remains unaltered, we can only reduce labor cost by lowering wages. But why should we not increase the productivity per unit of labor, and thus increase the output? Take a factory in which there are 5,000 workers, and suppose that the management is just able to sell the result of their labor. If to-morrow they began increasing their output by 20 per cent, and the whole 5,000 were retained, they would manufacture 20 per cent more goods. Then the question would arise: "Can this increased output be absorbed? Can it be sold?" The answer, of course, would depend upon the demand. But if increased productivity, and any other saving that could be effected, enabled the firm to reduce the price of the article sufficiently, the increased demand for it at a lower price might