The war has profoundly altered the economic conditions within every nation. It has modified not only our way of doing things but also our way of thinking about them. It has revolutionized our ideas concerning industry and trade. Old theories of commercial relations have been called into question or scrapped. New ideas are finding ready acceptance. More than ever before people are interested in what ought to be rather than in what is.

In the United States thousands of business and professional men by giving their money and talents in the public cause have felt the broadening and inspiring effect of public service. They have learned to sacrifice and they have enjoyed it. They have submitted to the restrictions of the War Trade Board and the War Industries Board and have learned to recognize that even in what they once thought was their private business the public is more controlling than the private interest. They are now more willing to look upon their businesses not only as organizations for private gain, but as trusts which they hold for the public, and upon themselves not merely as seekers after gain, but as trustees.

A more general recognition of the importance to society of the producer, whether on the farm or in the factory, has come as a result of our war experiences. The war could not have been won without the coöperation of the farmer, the laborer, the manufacturer, and the merchant. Back of the armies in the field, who deservingly received our plaudits, were the men and women who toiled in factories; the chemists, metallurgists, and other experts who worked many weary hours on the problems of war material; and the farmers, manufacturers, and merchants- all of whom deserve praise for loyalty and credit for helping to win the war. Modern war is economic as well as military in its methods.

Germany crumbled at last in large part because her economic system could no longer bear the strain of war. The Allies achieved success in large part because of their control of raw materials and because of their effective economic organization. We should now look upon industry and commerce as part and parcel of our life. We should neither fight it nor ignore it. should devise democratic means of directing and controlling it in the interests of public welfare.

More than anything else perhaps the war has emphasized the world-wide influence of trade and industry. Industrial progress or change in one country can no longer be ignored in others. Policies of trade and finance pursued by one nation are of vital concern to others. Nations individually must consider their problems in the light of world tendencies. More important still, nations must seek collectively the solution of the great questions which in the past have too frequently been left to take care of themselves.

The war has made us more internationally minded. than we were in 1914. At the same time it has increased the military and economic strength of our nation. How shall this strength be used? Surely not to further selfish national interests that will rouse the jealousy of other nations and sow the seeds of future strife. Rather let it be used to influence sceptical, and perhaps reluctant, peoples to accept ideas on which a just and permanent peace must rest.

Important as the effect of the war has been in modifying the competitive position of nations in industrial matters and in intensifying competition, more important and fundamental changes have taken place which our nearness to our problem may prevent us from clearly

discerning. Industry is the concern not merely of business men but of all society. It is not an individual but a social possession. Ownership no longer means the right to do as one pleases with the business under one's control. Industry has become so powerful, it has become so vital to the very existence of society, it so intimately concerns the welfare of many people, that the old doctrine of freedom as applied to business has been discarded, and business men, whether they like it or not, are being treated as trustees of the interests they hold. In order to appreciate fully however, what this new attitude toward industry and trade implies, we should look back and consider how industry has come to occupy the important place it now holds in our common life.

In the latter part of the 18th century there began a movement that has come to be known as the industrial revolution. Before this epochal change began, production was carried on in the home or in small shops. Goods were made largely by hand. Division of labor was not carried far. The handicraftsman and the merchant were often one and the same person. The technical methods used were handed down from father to son and in essentials were centuries old. Yarn was spun on the old spinning wheel; cloth was woven on the hand loom; shoes were made by the cobbler.

Under the influence of the revolution machinery supplanted hand production; steam was harnessed and did the work of many human beings; factories were built and in them were gathered laborers who no longer controlled their product but who worked for a wage. A series of great inventions brought about these changes. In 1769 the water-frame was invented by Arkwright and the use of water power in spinning was made possible.

In 1770 Hargreaves patented his spinning jenny. Nine years later Crompton further improved spinning machinery by inventing the so-called "mule." With these spinning inventions more yarn could be spun than the old hand looms could weave. This situation was reversed in 1785, however, when Cartwright invented the power loom. Whitney invented the cotton gin in 1792 and another obstacle to rapid production was removed. Steam meanwhile had been applied to machinery. Watts' steam engine was invented in 1769 and was quickly utilized in spinning and weaving, in the iron industry, and in transportation. These great inventions were only a beginning. Machinery was gradually applied to every industry and every walk of life. No one can look today at a textile mill, a steel rolling plant, an ocean steamer, a modern farm machine, without marvelling at the ingenuity of man.

These inventions stimulated production. The whole structure of society was changed. The factory system came into being. In England, where the influence of the revolution was most acutely felt, the country districts were depopulated and cities grew apace. Society tended to become divided, so far as production was concerned, into the "capitalists" or employers and the laborers who worked for a wage. Wealth accumulated in the hands of one class; the other lived often in squalor and want, herded in dismal slums of overcrowded and unsanitary cities. The labor problem came into

existence.

Those who were interested in the expansion of industry and trade were supported in their plans by the philosophy of individualism which was being advanced by an increasingly influential group of economists. This laissez-faire doctrine, as it was called, argued that if

men were permitted to pursue their own interests unrestrained, their action would result in the best interests of society being served. That government was said to be best that governed least. Free competition with a minimum of government regulation was conceived to be the best for society. An "invisible hand," it was argued, guided the selfish interests of man so that what he did in his own behalf promoted also the social welfare. As a matter of fact, laissez faire promoted, not human welfare, but the class interests of the mill owners and the great merchants who were supplanting the landowning and clerical classes as the chief influences in European Governments. Individualism had some beneficial effects in breaking down old traditions, outworn regulations, and false economic theories, but it was entirely inadequate as a social philosophy for the great industrial society which was developing. Free competition between the capitalists and laborers was unequal, and resulted in the exploitation of labor. The story of the struggle for the adequate protection of labor by law and by its own organized effort cannot be told here. But so firmly was the idea of "liberty," of "freedom," wrapped up with the interests of the ruling class that only slowly was legislation adopted to correct the evil tendencies of the doctrine that a man could do as he pleased with his "private property."

In the meantime there had occurred a marvelous expansion of industry. The industrial structure which today we take as a matter of course is largely a product of the 19th century. Enormous quantities of goods were produced at relatively low prices. The ordinary man could purchase things which in the 18th century were only for the rich. Goods accumulated and demanded new markets. Then came the great events