Page:The Economics of Unemployment.djvu/99

How enormous are these available economies in the single matter of the use of power has been brought out by several recent specialist Reports, showing the general neglect of employers in great industries like iron and steel to adopt known and proved economies of the generation and use of power. "It seems probable that if all the iron- and steel-works in this country adopted the most efficient methods, they could, on an average, improve their output by something between 50 and 100 per cent."^[1] But the iron and steel trade will not perform this real economy if they can apply the easy, false, and socially injurious economy of wage reduction.

There is, however, a third reason why wage reduction in most industries serving home markets is a bad remedy for trade depression. In an economic order where trusts, combines and other associations for price-control exist, there is no security that wage-reduction will not simply be absorbed in higher profits, without leading to increased production and employment.

Experience of the last two years affords abundant testimony to the power of business combinations in the later stages of manufacture or of distribution to intercept and hold for themselves in higher margins of profit the falls in price of materials and labour in the earlier stages of production. The recent lag in the fall of many retail prices is quite evidently due to this power to divert to profits the economy of low wages and other costs of production. If wage-cuts produced at once corresponding cuts in retail