other words, that efficiency and low wage can not, in the very nature of things, be compatible. In America, the higher wage was for a long time a thing the employer could not avoid, but in Europe it could be avoided. The recognition of the principle and its application to practise has hitherto been left to Germany, who has clearly demonstrated in her mills that it is "the improved workman who is accountable for efficient workmanship," and that it is the totality of the effect of this fundamental economic and educational movement that has brought Germany to the front in the present industrial competition. Dr. Eliot has put it:
We now know that the most efficient labor and the cheapest in proportion to its product is found where the laboring classes live comfortably, are well housed and fed, develop their intelligence and widen their prospects. The cheapest labor is no longer considered the most profitable.
Unfortunately, Dr. Eliot's conclusion is, though inevitable, somewhat premature so far as the United States is concerned, for it is still largely the rule in practise, though not in theory, to confuse low labor cost per unit with low total cost. Happily, the theory is becoming more and more the practise, and it is well, unless we are willing to be hopelessly outclassed by our neighbors in the competition for the world market.
There is, however, another factor, and one for which the employer is not so directly responsible, that assists in explaining why modern efficiency systems are not more universally adopted. This is in the fact that until quite recently no means has been available by which the employer could with any degree of accuracy measure the relative efficiency of men or of various systems of organization. The employer, of necessity, has paid one scale of wages to one class of workmen, because, as a rule, he had no means of gauging the amount of work of each man. It is exceedingly difficult to determine exactly what each of a number of workmen does each day, and even if he does know, the difficulty of comparing them is very great unless the work done by each man was of the same nature and done under the same conditions. The result has been that the employer has kept no individual records, and instead treats all workmen of a class as equals, and pays them the same wage. There may be 20 per cent, who are more efficient than the rest, but he has no means of distinguishing them from the others with any degree of accuracy. The result is that he declines to increase the wages, or makes such increases so small as to be insignificant as compared with differences in efficiency. In hiring men he offers the wage for which he can obtain the cheapest man, and if the good man stands out for a higher wage, he usually gets none at all. If the efficient man is to get a higher wage, his entire class must get it, and then the employer is paying the men more than they are worth. If the efficient
