or in strict equity there would be the same percentage of reduction upon the earnings of capital and labor. It is feared that the laborer would not look with content upon any reward to capital under such circumstances, and that the old warfare between the two would thus be renewed.

On the other hand, it is believed that by the obvious harmony thus established between the interests of capital and labor, the latter would be led to see that the co-operation of the former is indispensable for the payment of wages at all, and that any attack upon capital or any diminution of its quantity would be a direct attack upon labor, by depriving it of the fund out of which it is paid, and that the conservation of capital would thus become so apparent as the highest interest of the laboring class that strikes would cease, and even in bad times, from the steady employment thus insured, the labor would be better paid than under the present intermittent system. It is urged, moreover, that the personal interest thus excited in the workman would lead to greater economy in the manufacture, and bring down all waste to the minimum, and that it would be possible to establish such intelligent relations among the owners and workmen of the several co-operative establishments, that over-production would be checked by common consent, in time to prevent the serious losses to which it now subjects the industry of the world. It is quite certain that this latter end is achieved in an imperfect degree even in present practice. In Scotland the number of furnaces in blast during the present year has been very considerably reduced, with a corresponding reduction in the enormous stock of iron which had weighed down the prices below the cost of production. In France, by a resolution of the Ironmasters' Association, a reduction of six per cent. was inaugurated in the early part of the present year, and there is a general recognition of the necessity and wisdom of this course in times of overproduction among the iron-masters of Europe. And it is impossible to see that there would be less discretion exercised, or a less prompt remedy applied, if the workmen had such a direct relation to the business as to enable them to feel that it would be better to work less days at the old rate of wages, than more days at a reduced rate, producing precisely the same pecuniary result.

No intelligent observer can fail to remark the universal cry which comes up from the laboring classes in all parts of Europe for the reorganization of the relations of capital and labor. In England it has shown itself in strikes long continued and in all branches of business, reducing the workmen to beggary, and destroying the profits of capital to such an extent that, in a spirit of self-preservation, it takes flight where it can from the walks of industry, and remains unemployed rather than incur the risks and the anxiety of its uses in active business. In France, where, as will be hereafter seen, the organization of a strike is full of difficulties, the same longing manifests itself, not merely in the organization of minor co-operative associations for the supply of the necessaries of life, the erection of houses, and the production of goods, but in a literature which

seeks to analyze the social phases of industrial life and develop some better system for its reorganization. In the course of this almost microscopic examination of the social relations, property has been pronounced to be robbery, communism has been advocated as the remedy for all the social evils, and the autonomy of the individual lost sight of in the attempt to promote the welfare of mankind.

In Germany, on the other hand, under the practical guidance of Schultze Delitch, there have been established, up to the year 1865, 180 associations, with about 10,000 members, for the supply at wholesale prices of the raw material required by the members of the association in their several trades. These associations consist principally of shoemakers, carpenters, and tailors, and their business amounts to about 2,000,000 thalers annually. There were fifty "magazine" unions, comprising about 1,000 members, and doing a business of about 500,000 thalers annually, having for their object the sale of goods produced by the members of the association in a common store. There were also 26 co-operative associations for the production and sale of finished wares on common account, some of which appear to have been successful, while others have failed to realize the expectation of the members; and as this is the only feature of the Schultze Delitch system which has not proved successful, it is well to note that all the associations were organized independently of any existing business or capital employed in its conduct. They proceed upon the basis of disassociation from capital, as such, in the management of the business, and although the founder still expects to achieve successful results with associations formed on this basis, it would seem to be too wide a departure from the experience of mankind in all times to dispense with the watchfulness and patient scrutiny with which capital guards itself from destruction. Of co-operative stores there were, in 1865, 157. These are said to have been of slow growth at first, but are now rapidly extending. But the great success of Schultze Delitch has been in the organization of his credit and loan associations, of which, in 1865, there were 1,300 in existence, with more than 300,000 members. These "credit banks," as they are commonly called, are formed by the workmen themselves, who are supposed to be without any capital of their The capital of the bank is procured by the subscriptions of the members, payable in instalments, and by loans contracted on the credit of the association. Of course the share capital can only be slowly accumulated, but experience has shown that loans made to the association are quite safe, because each member is absolutely liable for all the debts, and the funds of the bank are only loaned to its own members, within limits restricted by the nature of the business to be carried on by the borrower, and after a rigid scrutiny of his character. The cardinal rule in the conduct of these banks is to take the minimum of risk and the maximum of responsibility. This report is not the proper place to enter into the history and details of management in these credit banks, but in

own.

1 Each about 75 cents in gold.

order to show the progress of the co-operative movement in Europe, I append a brief statement of the business of 498 of these banks, whose statistics happen to be accessible. These banks had 169,595 members, and the total amount of money advanced to them during the year 1865 was 67,569,903 thalers, or, in round numbers, $50,000,000 in gold. The total income of these banks, mostly, of course, in interest paid by borrowers, was 1,401,896 thalers, of which 699,558 thalers was paid for interest by the banks on money which they had borrowed, and 316,403 thalers was absorbed by the expenses of management. The total losses were 20,566 thalers, and the net profits were 371,735 thalers. The share capital accumulated by these banks amounted to 4,442,879 thalers, the borrowed capital amounted to 11,154,579 thalers, and the savings deposits of the members amounted to 6,502,179 thalers, and a reserve fund of 409,679 thalers had been accumulated to meet losses. When it is remembered that these banks were started by workmen without any capital, and it is observed that the accumulations of capital, deposits, and reserve funds exceed 11,000,000 thalers, or $8,000,000 in gold, the beneficent operation of the principle upon which they are founded will be appreciated, and some conception may be formed of the wonderful economy which will be introduced into the industry of the world when it becomes the interest of each man not only to produce the best possible result from his own labor, but to see that his fellow-workman does the same thing. In such a reorganization of industry the eye of the owner will be literally everywhere, and the loss either of time or of material will become almost impossible. This topic of co-operation is introduced here because in the Exposition there were constant evidences not merely of its importance, but of its becoming the leading social question of our day and generation. A special prize was constituted in favor of persons, establishments, or localities which, by an organization of special institutions, have developed a spirit of good feeling between those who co-operate together in the same labors and have secured the material, moral, and intellectual welfare of the workmen." Although Schultze Delitch was not an exhibitor, and no application for this prize was made on his behalf, and the special jury who had this order of recompense in charge lost the great opportunity of making themselves illustrious by voluntarily recognizing the greatest benefactor of the human race in our day, the labors of Schultze Delitch and the success which has attended his system, based as it is upon a profound knowledge of human nature, and the laws of social science, will survive the memory of the Exposition, and erect this monument in the reorganized structure of modern society.

In the United States, strange to say, we lack the legislation, either national or State, which makes it possible to introduce the co-operative system in any of the forms which the experience of Europe has shown to be practicable. In most of the States it is true that there are general laws of incorporation, but these do not meet the case in which a proprietor wishes to divide the profits with his workmen without making them partners, or giving them a voice in the management of the busi

ness. It is a subject which demands immediate attention, if it is expected to prosecute the iron business, or any other branch of industry, without the perpetual recurrence of strikes; and in order that the experience of older nations may be availed of, I have added to this report in an appendix (E) a transcript of the Prussian, French and English laws on this subject.

PRODUCTION OF IRON.

Originally the geographical position of the ore, and the natural avenues of transportation, determined the establishment of iron works, when the fuel employed was wood, which was to be found everywhere. But the demands of modern civilization soon outran the narrow bounds imposed by the supply of charcoal, and in our day the controlling element in the production of iron is the possession of mineral coal. And, throwing out of consideration the moderate quantity of iron still produced by charcoal, the iron business in Europe is found to be developed substantially in proportion to the quantity of coal possessed by the respective countries. A glance at the geological map of the world shows that within the limits of temperature favorable to active industry, the deposits of coal are widely distributed throughout Great Britain and the United States. In France there is but a limited area, and of irregular formation. In Belgium there is a larger coal field, but in veins of very moderate size. In Prussia, in the neighborhood of the Rhine, there is a small but valuable deposit of coal, while in Russia there is a considerable carboniferous area, the ultimate value of which is not yet well determined. The productive powers of these several coal fields are now pressed to limits approaching very nearly, if not quite to their ultimate capacity. In Great Britain the production in 1866 reached 101,630,500 tons; in France, between 11,000,000 and 12,000,000 tons; in Belgium more than 12,000,000 tons; and in Prussia, in 1865, 18,000,000 tons were produced.

The statistics procured at the Exposition have enabled me to construct the following table of the production of iron in the world in 1866, and there is every reason to believe that the figures given are substantially correct, as estimates were resorted to in only one or two cases, and those based upon former official returns:

Allowing for the production in barbarous countries, and something for the use of scrap iron, it may be stated in round numbers that the production, and consequently the consumption of the world has reached 9,500,000 tons of 2,240 pounds each, or 21,280 millions of pounds; so that if the population of the world has reached 1,000 millions, the consumption is a little over 20 pounds of iron per head. A careful calculation, after allowing for the iron exported, shows that the consumption per head in England is 189 pounds of iron. The consumption in Belgium has reached about the same limits. The consumption in France is 69 pounds per head, and in the United States not far from 100 pounds per head. If the industry of the whole world were as thoroughly developed as in Great Britain, the consumption of iron would reach nearly 90,000,000 tons per annum. If brought to the standard of the United States, a little less than 50,000,000 tons per annum would answer; or if to that of France, a little over 30,000,000 tons would be required; figures to be increased further by the steady increase of population in the world.

It will be interesting, therefore, to inquire into the sources of future supply possessed by the nations upon whom this great demand must come. Sweden possesses exhaustless supplies of the very richest and best kinds of primitive ore, but she has no coal, and a heavy expense for transportation must be incurred in bringing coal and ore together, and, as a general rule, it is found more economical to transport the ore to the coal than the coal to the ore. The limits of the manufacture of iron by wood have long since been reached, and hence Sweden can only be looked to as a source of supply of ore to other countries possessing mineral fuel when their iron mines are too heavily drawn upon.

In Russia, also abounding in immeasurable supplies of ore, there is a possibility, but not much probability, that mineral coal may be developed to an extent sufficient for its own supply of iron. The production of charcoal iron is also capable of some, but not of indefinite extension.

The same remark applies to Austria and the states of the Zollverein. In Italy there is no coal, and hence its rich ores are in the same category as those in Sweden, only far less abundant. Algiers abounds in ore, which has to be transported to the coal. Spain is rich in ore, and has a carboniferous formation on its northern borders, but no attempts have been made to render it available for the production of iron. In France the present manufacture of iron is only maintained by the aid of the importation of coal to the extent of over 7,000,000 tons, and of 495,000 tons of iron ore in 1867.

In Belgium, the size of the coal-field, the vertical character of the veins, and their small thicknesss, render it impossible that there should be any very considerable extension of the business, at least if the supply is to endure for any protracted period. Already it is estimated that Belgium produces as much coal as France, two-thirds as much as Prussia, and one-eighth that of Great Britain, out of a coal-field only ninety-seven miles in length, and twelve miles in breadth at its widest point, and in