Society: Its Origin and Development

by Henry K. Rowe

207. Mercantile Exchange.—Important as is the manufacturing industry in the life of the city, it is only a part of the economic activity that is continually going on in its streets and buildings. The mercantile houses that carry on wholesale and retail trade, the towering office-buildings, and the railway and steamship terminals contain numerous groups of workers all engaged in the social task of supplying human wants, while streets and railways are avenues of traffic. The manufacture of goods is but a part of the process; distribution is as important as production. All these sources of supply are connected with banks and trust companies that furnish money and credit for business of every kind. The economic activities of a city form an intricate network in which the people are involved.

Hardly second in importance to manufacturing is mercantile exchange. The manufacturer, after he has paid his workers, owns the goods that have been produced, but to get his living he must sell them. To do this he establishes relations with the merchant. Their relations are carried on through agents, some of whom travel from place to place taking orders, others establish office headquarters in the larger centres of trade. Once the merchant has opened his store or shop and purchased his goods he seeks to establish trade relations with as many individual customers as he can attract. Mercantile business is carried on in two kinds of stores, those which supply one kind of goods in wholesale or retail quantities, like groceries or dry goods, and those which maintain numerous departments for different kinds of manufactured goods. Large department stores have become a special feature of mercantile exchange in cities of considerable size, but they do not destroy the smaller merchants, though competition is often difficult.

208. The Ethics of Business.—The methods of carrying on mercantile business are based, as in the factory, on the principle of getting the largest possible profits. The welfare of employees is a secondary consideration. Expense of maintenance is heavy. Rents are costly in desirable locations; the expense of carrying a large stock of merchandise makes it necessary to borrow capital on which interest must be paid; the obligations of a large pay-roll must be met at frequent intervals, whether business is good or bad. All these items are present in varying degree, whatever the size of the business, except where a merchant has capital enough of his own to carry on a small business and can attend to the wants of his customers alone or with the help of his family. The temptation of the merchant is strong to use every possible means to make a success of his business, paying wages as low as possible, in order to cut down expenses, and offering all kinds of inducements to customers in order to sell his goods. The ethics of trade need improvement. It is by no means true, as some agitators declare, that the whole business system is corrupt, that honesty is rare, and that the merchant is without a conscience. General corruption is impossible in a commercial age like this, when the whole system of business is built on credit, and large transactions are carried on, as on the Stock Exchange, with full confidence in the word or even the nod of an operator. Of course, shoddy and impure goods are sold over the counter and the customer often pays more than an article is really worth, but every mercantile house has its popular reputation to sustain as well as its rated financial standing, and the business concern that does not deal honorably soon loses profitable trade.

Exchange constitutes an important division of the science of economics, but its social causes and effects are of even greater consequence. Exchange is dependent upon the diffusion of information, the expansion of interests, and growing confidence between those who effect a transaction. When mutual wants are few it is possible to carry on business by means of barter; when trade increases money becomes a necessary medium; world commerce requires a system of credit which rests on social trust and integrity. Conversely, there are social consequences that come from customs of exchange. It enlarges human interests. It stimulates socialization of habits and broader ideas. It encourages industry and thrift and promotes division of labor. It strengthens social organization and tends to make it more efficient. Altogether, exchange of goods must be regarded as among the most important functions of society.

209. Business Employees.—The business ethics that are most open to criticism are those that govern the relations of the merchant and his employees. Here the system of employment is much the same as in the factory. The merchant deals with his employees through superintendents of departments. The employment manager hires the persons who seem best qualified for the position, and they are assigned to a department. They are under the orders of the head of the department, and their success or failure depends largely on his good-will. Wages and privileges are in his hand, and if he is morally unscrupulous he can ruin a weak-willed subordinate. There is little coherence among employees; there are always men and women who stand ready to take a vacant position, and often no particular skill or experience is required. There has been no such solidifying of interests by trade-unions as in the factory; the individual makes his own contract and stands on his own feet. On the other hand, there is an increasing number of employers who feel their responsibility to those who are in their employ, and, except in the department stores, they are usually associated personally with their employees. Welfare work is not uncommon in the large establishments, and a minimum wage is being adopted here and there.

One of the worst abuses of the department store is the low-paid labor of women and girls. It is possible for girls who live at home to get along on a few dollars a week, but they establish a scale of wages so low that it is impossible for the young woman who is dependent on her own resources to get enough to eat and wear and keep well. The physical and moral wrecks that result are disheartening. Nourishing food in sufficient quantities to repair the waste of nerve and tissue cannot be obtained on five or six dollars a week, when room rent and clothing and necessary incidentals, like car-fare, have to be included. There are always human beasts of prey who are prepared to give financial assistance in exchange for sex gratification, and it is difficult to resist temptation when one's nervous vigor and strength of will are at the breaking-point. It is not strange that there is an economic element among the causes of the social evil; it is remarkable that moral sturdiness resists so much temptation.

210. Offices.—The numerous office-buildings that have arisen so rapidly in recent years in the cities also have large corps of women workers. They have personal relations with employers much more frequently, for there are thousands of offices where a few stenographers or even a single secretary are sufficient. Office work is skilled labor, is better paid, and attracts women of better attainments and higher ideals than in department store or factory. Office relations are pleasant as well as profitable. The demands are exacting; labor at the typewriter, the proof-sheets, or the bookkeeper's desk is tiresome, but the society of the office is congenial, working conditions are healthful and cheerful in most cases, and there are many opportunities for increasing efficiency and promotion. The office has its hardships. Everything is on a business basis, and there is little allowance for feelings or disposition. There are days when trials multiply and an atmosphere of irritation prevails; there are seasons when the constant rush creates a wearing nervous tension, and other seasons, when business is so poor that occasionally there are breakdowns of health or moral rectitude; but on the whole the office presents a simpler industrial problem than the factory or the store.

211. Transportation.—A third industry that has its centre in the city but extends across continents and seas is the business of transportation. Manufactured goods are conveyed from the factory to the warehouse and the store, goods sold in the mercantile establishment are delivered from door to door, but enormous quantities of the products of economic activity are hauled to greater distances by truck, car, and steamship. The city is a point to which roads, railways, and steamship lines converge, and from which they radiate in every direction. By long and short hauls, by express and freight, vast quantities of food products and manufactured goods pour into the metropolis, part to be used in its numerous dwellings, part to be shipped again to distant points. Along the same routes passengers are transported, journeying in all directions on a multitude of errands, jostling for a moment as they hurry to and from the means of conveyance, and then swinging away, each on its individual orbit, like comet or giant sun that nods acquaintance but once in a thousand years.

The business of transportation occupies the time and attention of thousands of workers, and its ramifications are endless. It is not limited to a particular region like agriculture, or to towns and cities like manufacturing; it is not stopped by tariff walls or ocean boundaries. An acre of wheat is cut by the reaper, threshed, and carted to the elevator by wagon or motor truck. The railroad-car is hauled alongside, and with other bushels of its kind the grain is transported to a giant flour-mill, where it is turned into a whitened, pulverized product, packed in barrels, and shipped across the ocean to a foreign port. Conveyed by rail or truck to the bakery, the flour undergoes transformation into bread, and takes its final journey to hotel, restaurant, and dwelling-house. Similarly, every kind of raw material finds its destination far from the place of its production and is consumed directly or as a manufactured product. This gigantic business of transportation is the means of providing for the sustenance and comfort of millions of human beings, and in spite of the extensive use of machinery it requires at every step the co-operative labor of human beings.

212. Growth of Interdependence.—It is the far-flung lines of commerce that bind together the peoples of the world. Formerly there were periods of history, as in the European Middle Ages, when a social group produced nearly everything that it needed for consumption and commerce was small; but now all countries exchange their own products for others that they cannot so readily produce. The requirements of commerce have broken down the barriers between races, and have compelled mutual acquaintance and knowledge of languages, mutual confidence in one another's good intentions, and mutual understanding of one another's wants. The demands of commerce have precipitated wars, but have also brought victories of peace. They have stimulated the invention of improved means of communication, as the demands of manufacturing stimulated invention of machinery. The slow progress of horse-drawn vehicles over poor roads provoked the invention of improved highways and then of railroads. The application of steam to locomotives and ships revolutionized commerce, and by the steady improvements of many years has given to the eager trader and traveller the speedy, palatial steamship and the train de luxe.