This can be accomplished only with intelligent direction. Capital alone would not supply our wants, nor would labor.

Both would not be sufficient.

It is by the necessary amount of capital and labor, along with skilled intelligence and direction, that the needs of all are met.

Questions and Topics for Discussion

Is capital all that we need in order to produce goods?

Is labor sufficient? Are both sufficient?

What else is needed?

Tell why skill and intelligence are necessary.

What happens if capital and labor are not used intelligently?
What else is needed?

Give three examples which show that direction is also needed.

Would capital alone supply our wants?

Would labor supply them?

What must be combined with both of these in order that the needs of all may be met?

Discuss the following quotation:

"Labor without capital accomplishes nothing; capital without labor accomplishes nothing."

What would you add to this statement?

LESSON XIV

SUPPLY AND DEMAND

Even with the intelligent direction of industry, it sometimes happens that the supply of a certain article is less than the demand for that article.

It may be that less coal has been mined than is necessary for the winter's supply.

Coal will be scarce. There will not be enough to go around. Yet, everyone wants coal, that is, the demand is great.

In such cases it will require more hours of work to buy a ton of coal than it did when coal was plentiful. In other words, a man must pay more to get it. The price will be higher.

In the same way, if the wheat crop fails, flour will be

scarce.

A wool merchant will have to sell more wool to pay for a barrel of flour than he did when there was plenty of wheat.

If tenements are scarce, the landlord will have many opportunities to rent his house.

He therefore sets the highest price he can get, and rents it to the highest bidder.

On the other hand if there are many houses vacant, the landlord will be anxious to rent his. He will therefore accept a lower price.

It is the same whenever the supply of anything is greater than the demand for it.

If there is a bumper crop of potatoes, less labor will buy them, and more of the week's pay will be left to buy other things.

Vast quantities of rubber boots and shoes may have been made in America to fill an unusual need in Europe. Suddenly something happened, and there is no longer a need.

The market becomes flooded with rubber boots and shoes. There are enough on hand for two years.

Whenever this happens there will be a decided slowing up of work in the factories where they are produced.

Prices will drop, and workers will be laid off in many cases. Unskilled labor will be the first to go.

Sometimes a panic follows.

Then there is a long period of unemployment, when men have no jobs. People who have no money cannot buy. This fact makes the demand even less. Dealers wish to get rid of their large supply, and they lower prices again.

As the demand decreases, prices are lowered still further.

Thus we see that prices are not set by people.

Instead they are set by the law of supply and demand. When the supply is greater than the demand, prices are lower.

But when the demand for anything,

whether it is a

house, a certain kind of food, or an automobile, — is greater than the supply, the prices will be higher.

By a little thinking and looking ahead we can see how this law will work and get ready for it.

Questions and Topics for Discussion.

Have you ever known of cases where the supply of an article was less than the demand? Name them.

What happens when this is true?

What effect does this condition have on prices?

Do you also know of cases where the supply of certain articles or goods was greater than the demand? Tell what they were.

What effect does this have on the market?

What effect does it have on the work at the factories where such articles were produced?

What about prices? What sometimes follows?

As conditions become worse how is the demand affected?
What happens to prices as the demand becomes less and less?

Are prices set by people, then?

By what are they set?

When do prices become lower?

When do prices become higher?

Does the law of supply and demand ever affect workers?

What may we do by a little thinking and looking ahead?

Have you seen this law work in your native land, as well as in America?

Tell the class of any special cases when this law has affected you and your family.

LESSON XV

LABOR UNIONS, THE STRIKE, LOCKOUT, AND
ARBITRATION

In all large industries there are many employees. There is a much smaller number of employers, who have charge of the employees.

Sometimes employers and employees disagree on such questions as wages, hours, or working conditions.

In such cases the employees often unite, that is, they band themselves together to form a union.

Acting together they present their claims to the employers.

Often these claims have been fair, and have resulted in great improvement in working conditions.

Through the efforts of the unions many good laws have been passed.

Some of these laws provide protection from overwork. They forbid factory work for children. They prevent

employers from hiring people at a wage lower than is needed to live decently.

They also provide certain hours of labor for women. On the other hand, employees sometimes make demands which do not seem fair to the employer.

In such cases the employer may refuse to grant them.

The employees may then "strike." Acting together they "walk out," that is, leave their work.

The employer does not like to see his factory and machines idle. He may have orders to fill. So he is sometimes forced to give the workers what they demand.

In such a case we say the strikers win.

This is well if what they have been striking for is for the good of all.

Sometimes when the employer will not grant the demands of the employees, he does not wait for them to strike.

He shuts his shop, that is, he will not allow the employees to work. This is called a "lockout."

It sometimes happens that, after a time, the employees are willing to return to work under the same conditions that existed when work was stopped.

In such a case the employer wins.

So we see that sometimes one side wins and sometimes the other.

In either case, whether it is strike of the employees, or a lockout by the employers, a third party always suffers. This third party is the public.

Like war, the strike or lockout means loss of time and