their competing to any extent in the well-defined fields of the various handicrafts; it is also probable that they produced goods not included in the category of articles controlled by the guild regulations. We may say, then, that the guilds existing at the beginning of the nineteenth century controlled practically all the industries which had grown up since the middle ages. A new epoch of industrial activity began with the restoration of peace at the close of the Napoleonic wars. As the largest and most important of the States now forming the German Empire, Prussia alone will be considered in studying the development of the period in question. Though the change in policy toward the guilds after the downfall of Napoleon did not endanger their existence, it altered their character as purely urban institutions. By compelling them to submit to the general regulations for the whole country, and by making uniform the requirements for the city and the country guilds, the demand for industrial freedom was, theoretically at least, answered affirmatively. Nevertheless, the experience of a few years showed that practically it was impossible for the artisan of the country to compete with the artisan of the town; the old rights as to the markets, the "ban mile" (forbidding outside artisans to approach within a mile of the city), were upheld, while acquisition of the mastership by any but the sons or relatives of masters was contested bitterly. However, in spite of opposition from many sides, conditions, as far as legislation was concerned, were slightly but steadily made easier and freer. By the end of the sixties complete industrial freedom was granted in most of the German States. The transition was made successfully. Fears that the removal of the old restraints would lead some without training to set up in business for themselves, and thus lower the standard of work, proved groundless. The special investigation into the condition of the hand-working industries, made in the summer of 1895, showed that 97 per cent of the independent persons had received a reasonable training in their trades.

It is important to keep in mind the late date at which the old restraints on trade and industry were removed. While England and the United States have had industrial freedom in practically every respect for the whole of the nineteenth century, the Germans have had it for only a generation. The evidence of so recent a transition is seen in the number of establishments in various trades still bearing a close resemblance to the older form of industrial production. To an American it seems strange to regard soap making or rope making as industries where hand production is a marked feature, but this condition is due partially, at least, to the fact that only a few years have elapsed since the traditions of the older methods held sway. In this brief period conditions have changed and opportunities hitherto unknown have sprung up everywhere. Most prominent among the factors changing the whole aspect of Germany are the improved means

of communication. This has made concentration of production possible, and then has followed the series of problems developed by the rise of the so-called factory system.

Of these problems, that concerning the hand-working producer occupies a prominent place in the literature of to-day. It is simply a question as to the survival of the older form of production. The form which a century ago almost monopolized industrial production is now struggling with its younger competitor for the control of production. Briefly stated, the problem is this: How far is production by hand methods capable of competing against other forms? What fields of production does it still control?

Until recently there was a lack of authoritative material on the subject, but since 1895 three valuable contributions have been made: First, the Gewerbezählung, the German industrial census of June 14, 1895; second, the Erhebung über Verhältnisse im Handwerk taken in the summer of 1895, a collection of statistical data on the conditions of the hand worker; and third, the series of volumes issued in the years 1894 to 1901 by the Verein für Socialpolitik, an association somewhat similar to the American Economic Association. The first two of these are official publications of the imperial statistical office. The census includes for the whole of Germany every person engaged in any industrial occupation. The collection of statistical data is an investigation into the trades most closely related to the old occupations controlled by the guilds. Though covering only certain selected districts, a fairly successful effort has been made to have evenly represented the different phases of the large and small towns, the country districts, and the villages. The third and most interesting of the works, that of the Verein für Socialpolitik, is an investigation by private persons into a series of hand-working trades in various localities. That the general standard of the work is so high is owing to the careful editing and supervision by the head of the movement, Karl Bücher, of Leipzig. The authors of the studies were for the most part students of economics at the universities of Leipzig, Berlin, Breslau, Jena, and other towns. Being entirely voluntary, the work is uneven in many respects; the geographical distribution of the industries in the large and small towns and in the rural districts has not been considered so well as might be wished, while several important industries are lacking. The number of contributions is 112; 99 of these treat of single industries in various localities, the others treat of all the industries in a definite locality or are of special character. Most of the studies seek to answer the following questions: What did the hand-working industry formerly produce? What does it now produce? With what degree of success does it compete with other industrial forms? (a)

a Schriften des Vereins für Socialpolitik. Volume 76, page 18.

In connection with the problem whether this industrial form can compete with other forms, is the question whether the type of person evolved by the different forms is higher in the one case or the other. An assumption at the basis of many arguments in favor of the handworking producer is that he is mentally and morally superior to his competitors. As this assumption has never been proved the question may be put aside as one not relevant to the present problem.

COMPETITION OF INDUSTRIAL FORMS.

At the present time the industrial forms competing with each other may be divided into three classes: First, the factory; second, the house-working or domestic system; third, the hand-working system or system of shop production.

The lack of definite terms in English to describe accurately the phenomena named above is significant as indicating both the looseness of thought on the question and the lack of interest in it. Economic literature on this subject in German has been enriched by the activities of Roscher, Bücher, and Stieda. Bücher has paid special attention to formulating clear definitions and an exact terminology in the industrial field, and so successful have been his efforts that his terms have been generally adopted. In the cyclopedias of Conrad (a) and of Elster (b) his articles on "Industry" (Gewerbe) contain a brief summary of the views expressed at greater length in his other works.

By the term "hand-work production" is understood that type in which the producer himself is the possessor of the means of production, in which he produces for a definite market or known body of consumers, and in which there is but slight use of machinery. Under this form are included artisans, handicraftsmen, and shop producers. The distinctive characteristic is the personal relation between producer and consumer.

Opposed to the above is the "house-working" or "domestic" system. Here an undertaker with capital carries on operations by employing laborers to work in their houses. The conditions vary; sometimes the workman supplies raw materials, tools, and other requisites and receives a specified price for his finished product; sometimes the employer supplies everything needed and simply pays a stipulated price for a certain amount of labor on the raw material. The most usual form is a combination of these, where the employer supplies the most important part of the raw materials and includes payment for the others in the contract price of the finished product. A knowledge of market conditions is essential to the factor or employer, who is usually a merchant rather than one acquainted with the processes of

a Handwörterbuch der Staatswissenschaften, Zweite Auflage, Band IV. Jena, 1900. Wörterbuch der Volkswirtschaft, Band I. Jena, 1898.

manufacture. The technological features of this method are similar to those of the hand-working system, and the capital required is invested in fixed forms to a slight degree only. There is here no personal contact between producer and consumer, intermediaries of various kinds. being employed.

The "factory system" means production by an undertaker who employs persons to carry on productive operations in his establishment and who must be possessed of both technological and commercial knowledge. Both the domestic and factory systems are capitalistic undertakings—the former, however, using capital not fixed, the latter emphasizing fixed capital. The former is mainly a commercial undertaking, the latter is mainly a series of technological operations which may be termed productive. Combinations of the two forms are frequent; often parts of the operations of production are performed by workmen in their own homes and parts in the rooms of the factory.

These are by no means the only forms of economic production. Other forms which may be mentioned are: "Home work," production in the home by members of the household for family needs; "wage work," production in the house of the consumer by a nonmember of the household who is paid a wage for his labor on the goods provided by the consumer. These two are by no means unimportant, but they do not figure so prominently in the economic life of the present.

PRESENT CONDITIONS.

CHARACTERISTICS OF THE INDUSTRIAL POPULATION.

A brief statement as to the distribution of the industrial population among the various industries is necessary to a clear understanding of present industrial conditions in Germany.

The classification adopted by the industrial census of 1895 includes: Division "A," those engaged in gardening and fishing; division "B," the industrial population proper, i. e., those engaged in the mining industries, the industries proper, and the building trades; division "C," those engaged in trade and transportation. The present study treats of division "B" only.

In this division in 1895 there were 2,146,972 establishments employing 8,000,503 persons. In comparison with the previous industrial census of 1882, there was a decrease of 5.4 per cent in the number of establishments, and an increase in the number of persons of 34.8 per

cent.

The average number of persons per establishment was 3.7 persons in 1895, as opposed to 2.6 persons in 1882.

According to the number of persons employed in 1895, as shown in the report of the census (a), the various industries may be arranged in three classes: First, those industries employing over 900,000 persons;

a Statistik des Deutschen Reichs, Neue Folge. Volume 113, page 102.

second, those employing 500,000 or less than 900,000; and, third, those with less than 500,000 persons. They are as follows:

NUMBER OF PERSONS EMPLOYED IN EACH GROUP OF INDUSTRIAL OCCUPATIONS, 1895.

There are only a few remarks to be made in summing up this table. In the first class, which includes 55.6 per cent of the total industrial population; the first three groups, which supply the localized wants of food, clothing, and shelter, engage the activities of 43.2 per cent of the industrial population. With but two exceptions (sugar, and clothing other than silk), none of the articles produced by these three groups were exported in sufficient quantities to form 1 per cent of the total exports (a), so that the groups may be said to be almost wholly devoted to supplying home wants.

In the second place, the first four groups contain the greater part of the former handicrafts or traditional hand-working trades, such as shoemakers, tailors, carpenters, masons, bakers, brewers, weavers, spinners, etc. These trades have been the scene of the changes which have caused the rise of the problem of the hand-working producer.

The other two classes into which the industries of the Empire have been divided may be roughly characterized as the heavy manufactures and the light manufactures. The remaining portion of the industrial population is distributed with some regularity among them and they produce the majority of the articles which form the exports of the country. For the most part they are of recent growth.

These few suggestions as to the general features of the industrial population will serve as an introduction to the special subject under discussion. In the above table comparison was made on the basis of the number of persons employed in each industry. Before making

a Die Deutsche Volkswirtschaft am Schlusse des 19 Jahrhunderts, bearbeitet im Kaiserlichen Statistischen Amt, Berlin, 1900, page 147.