ordinary economic activities and put into military service where they produce no economic goods, but consume immense quantities of food, clothing, and war supplies. Another host of laborers at home is withdrawn from peaceful and productive activities and put to work making supplies for the army. Though other influences are also at work, this alone accounts for the scarcity and resultant prices of goods during war times. There can be no recovery from high prices until production not only catches up with consumption, but passes it. Of all the belligerents on the continent of Europe in the recent war, Belgium was the first to settle down to work after the war was over, and it bids fair to reach soon its pre-war production. It is work and thrift which win in war or in peace. A man who produces less than he consumes is an economic liability and not an asset. Summary. The production of wealth is the creation of form, place, time, and possession utilities. Those who render personal services also create utilities and are producers of wealth. Every producer of wealth is an aid to the economic life of a community. Every person who is able but unwilling to work is a detriment to any com munity. Land, labor, and capital co-operate in the production of wealth. Each is dependent upon the other. Labor and land can do little without capital, nor can any combination of two factors do much without the third. Although the area of the earth's surface cannot be increased, it is possible to increase the useful area. Capital is increased by savings. The greater the supply of land and capital, the more is the demand for labor. War destroys capital and labor. Hence it diminishes production of wealth. Even land may be injured by war. Parts of Belgium, once rich agricultural lands, were flooded for years with salt water and cannot become productive for generations. Much of the land of northern France has been injured by being impregnated with gases and the top soil blown away by explosions. Work and saving enable a country to recover from war conditions. TOPICS FOR DISCUSSION, DEBATE, AND SPECIAL REPORTS I. Are teachers producers of wealth? Are editors? Are gamblers? Why? 2. 3. 4. 5. Give a list of non-producers of wealth. Show what non-producers are detrimental to a community. The city of Chicago has filled in the lowlands which formerly formed the border of Lake Michigan and has reclaimed much land that was once covered with water. The Chicago lake front, once an ugly spot, has become a park. What land in your community has become available in recent years? What lands now idle in the vicinity of your city may be made useful? Show how railroads increase the available lands of a country. Show how the Reclamation Service of the Department of the CHAPTER VI LABOR AND POPULATION The second factor in the production of wealth is labor. To the economist all effort directed toward the production of wealth is labor, whether this effort be of mind or body. The effectiveness of labor is influenced by many qualities, the most obvious of which is strength. Other things being equal, a strong man can work better than a weak one. Physical strength alone is of little value; many of the lower animals far surpass man in that. Moral qualities, such as temperance, truthfulness, and reliability are needed. Mental traits such as skill, quickness, and mechanical ingenuity are also necessary. Labor is much more efficient under good physical surroundings. It pays to have factories well lighted and ventilated and properly equipped in other respects. Social esteem adds to the productiveness of labor. Wherever labor is held in low esteem it produces little. If labor is highly esteemed men do not seek to avoid it and they have pride in their calling. Temporary Lowering of Efficiency of Labor.-In the United States the efficiency of labor was undoubtedly lowered during the war and immediately after its close. In 1914 a capable bricklayer would lay 1,900 bricks per day for a wage of $5. Bricklayers in 1920 did not average more than half the efficiency of 1914, though wages in 1920 were $9 per day. This loss in efficiency was partly caused by the necessity during the war of getting labor of any degree of ability. During the war any man who could work at all could get a job, and high wages attracted all kinds of men. Professor David Friday, in a valuable contribution to economic science, remarks: * "There seems to be a general opinion among employers and managers that the efficiency of labor to-day is as low as 60 per cent of its 1914 level. Now an average payment of 210 per cent† for an efficiency of 60 per cent means a unit cost for labor of 350 per cent, as against 100 in 1914. If the efficiency of labor is as high as 70 per cent, then the labor cost per unit of output is 300 per cent of what it was then. That such an increase in cost per unit of output must exercise a powerful effect upon price is apparent. Not only is the cost of the labor element in production increased, but the overhead costs are also greater as the time consumed in production is longer. "This fall in output per laborer has proceeded at an unusual rate since the summer of 1919. Coupled with the increase in money wages there seems little doubt that there has been since the armistice a general increase in the labor cost per unit of at least one-third and possibly onehalf." In the late autumn of 1920 and the winter of 1921 there was a gradual increase in the efficiency of labor. Industrial plants discharged less efficient laborers and so raised the general average of efficiency. Though a war may render labor less efficient for a time, as soon as normal con * Profits, Wages and Prices, p. 109. †The average increase in wages since 1914. ditions are restored efficiency begins to return to old standards. Division of Occupation and Division of Labor.-No man can do all things equally well; a jack-of-all-trades has ever been a master of none. Since this is true it is much better for a man to confine his attention to those things which he can do well and exchange his labor or the goods which he produces for the other articles which he needs. This is division of occupation. The advantages of division of occupation were understood very early in the history of mankind. Among savage tribes the arrow-heads were made by men who were skilful workers in stone, the shafts were made by other men, and the bows by yet another set of men. As civilization increased the division of occupation increased, and in modern times there is a greater specialization, which we call division of labor. Few men make an entire article. For example, fifty years ago there were still men who made an entire shoe, but now there are a score of operations in the making of a shoe and each worker is confined to one of these operations. One man cuts out the upper, another cuts the sole, another sews the upper, another runs a machine that makes eyelets, another puts on the heel. Thus the shoe is made by a number of men, no one of whom could make an entire shoe. This division of labor holds in all employments. A striking example of the minute division of labor in the great packing-houses is given by Professor Commons: "It would be difficult to find another industry where division of labor has been so ingeniously and microscopically worked out. The animal has been surveyed and laid off like a map; and the men have been classified in over |