## Slouching Towards Utopia? The Economic World of the Twentieth Century: Chapter 7.2: The World in 1900: Poverty

#### 7.2: The World in 1900: Poverty

Poverty

Let us begin with how poor the world was in the last generation of the nineteenth century. In some ways the world economy at the start of the twentieth century was still remarkably preindustrial. Most human beings still earned their bread out of the earth by the sweat of their brow. Most human beings could not read. Most human beings had not seen a steam engine up close, or travelled in a railway train, or spoken on a telephone, or lived in a city. For most human beings life expectancy was still low--little higher than it had been in most parts of the world since the neolithic revolution. At the start of the twentieth century Germany was the world's third superpower, more powerful and more industrialized than any other nation save Britain and the United States. When Adolf Hitler's Nazi Germany went to war against France in the spring of 1940, four-fifths of the wheeled and tracked vehicles in its army were powered by horses. And mules.

Even where things were different in the rapidly-growing half-industrialized core of the world economy, there was still a sense in which what we would call modern life was a thin and new crust on top of older patterns that still owed much to traditional agrarian and commercial patterns. Great Britain was the economic heart of the late nineteenth-century world. It was not the richest country in the world--its settler colonies of Canada and Australia and its ex-settler colony of the United States were richer because of their large farm and ranch sizes and their abundant natural resources. Half a continent will, said economic historian J.H. Clapham speaking of the United States, in the end raise more coal and melt more steel than one small densely-populated island. But the relative wealth of Canada and Australia and the United States at the end of the nineteenth century was due as much to human and animal muscles and lucky geography as to industry.

In Great Britain alone was the economy primarily industrial at the turn of the twentieth century. And even in Great Britain the veneer of modernity was little more than a veneer. It was true that the share of the labor force employed in agriculture was dropping toward 15% at the start of the twentieth century. The eve of World War I saw agriculture account for only twelve percent of the British labor force; while manufacturing and construction accounted for 38%; and distribution and services for 32%. But a quarter of Britons were still illiterate as late as 1870. Primary school enrollment did not become universal until the eve of World War I. Life expectancy at birth was still fifty years or less. And less than five percent of the population went to secondary school. Britain’s--precocious--decline in the share of the labor force in agriculture suggested an economy more advanced, more industrialized, and more rich than was in fact the case.

And Britain was by far the most advanced and industrialized of the world’s economies. In the United States, and in Europe outside of Britain, farmers still made up the largest single occupational group. More than half the population still lived in the country, farming the land or providing the basic goods and services that farmers needed. Agriculture was still a very substantial share of GDP in the late-nineteenth century. It was only halfway through its long decline to its present role as a very small share of economic activity in industrialized economies. In the American west, and in the other countries that Arthur Lewis named "regions of European settlement"--Canada, Australia, New Zealand, and Argentina--farming was not only the core of the economy but farmers were relatively rich, both compared to those dwelling in the cities and compared to those who had remained in Europe.

The eve of World War I still saw more than one out of three Americans at work at work in agriculture, and one in thirty at work in mining. And with the exception of Belgium, other European countries were much closer to the American than the British pattern in their distribution of the labor force between town and country, and among sectors. This turned out to have powerful implications for politics as World War I drew closer: too much political influence was still exerted by agrarian landlords who saw themselves as the descendents of knights who fought for their kings with their swords, and proved their worth through battle.

Many of the processes that have blossomed since to make our industrial--post-industrial--economy were clearly underway by the start of the twentieth century. But they were for the most part only seedlings. In what matters most, in the warp and woof of everyday life, our counterparts in the industrial core of the world economy around 1900 still had more in common in their styles of life with their predecessors of 1600 or 1700 than with us today.

For example, in 1905 an anonymous American college professor--"G.H.M."--wrote a four-page article for the Atlantic Monthly in which he pleaded for more money for college professor salaries, and claimed to be vastly underpaid. The first thing to note is his salary: he claimed that the "average college professor’s salary"--the salary that he saw as clearly inadequate and unfairly low--"is about $2,000" in the dollars of that day, 1900. Yet Stan Lebergott's estimates in the Historical Statistics of the United States are that the average annual earnings of an employee in America in 1905 were$490 dollars if employed for the entire year (or $451 taking account of the hazards of unemployment):$2,000 was four times average of GDP per worker at the turn of the century. In order to match turn-of-the-century professors in terms of income relative to the national average, a professor today would have to make an academic salary of $300,000–a height rarely attained, and far above any average. The second thing to note is that our professor sees himself as a reasonable and badly underpaid man. He is not asking for what he would see as the "large salar[y], commensurate with what equal ability would bring in other lines of work ($10,000 to $50,000)"–or 20 to 100 times the then-current average level of GDP per worker. Today, 20 to 100 times average GDP per worker would be between$1,600,000 and $8,000,000 a year: the salaries of CEOS. At 60 times average GDP per worker (roughly the mid-point of G.H.M.’s range, corresponding to a salary of$2.5 million a year), we are down to less than 45000 households in today’s United States.

That an ordinary professor could feel that his talents ought, in some sense, to earn such an enormous multiple of the average income is a sign of how unequal an economy and society the turn of the twentieth century U.S. was. We have not yet meade it back to Gilded Age heights of inequality. Yet as this professor goes through his budget, he expects his readers to understand that his family is indeed strapped for cash and cannot support an appropriate and tolerable lifestyle. And what strikes us is how poor that start of the twentieth century century upper-class genteel lifestyle is. G.H.M.'s feeling of being sharply constrained by material necessity is real: as this professor goes through his budget, he expects the highly-literate and elite readers of the Atlantic Monthly to nod and agree (and we modern readers do indeed nod and agree) that his family is strapped for cash.

"We must pay $25 [at 1900 prices] a month for even a passable servant"; that is$300 a year. Add to that $10 a month for laundry, for the "servants will do no laundry work."$1 a month for haircuts. $2 a month for a gardener. On personal servies alone we are up to$445 a year, and the good professor sees these expenditures as absolute necessities. He cannot economize on them. He has no choice but to make such large expenditures on personal service--if he does not, his household will fail to make a properly upper-middle-class impression, for the lawn must be trimmed, the house dusted, the clothes cleaned, and the children washed. And "shall we expect our wives to bear and rear children, do all of the housework, sustain their social duties, and remain well and strong" without servants? G.H.M. has no gasoline-powered lawnmower, no electric hedge clippers, no vacuum cleaner, no dishwasher, and neither a washing machine nor a dryer. Consumer durables take the place now of what took servants’ time sweat for college professors’ households (and housewives', daughters', and aunts' sweat for others) a century ago.

The professor says that his food bills average $55 year-1900 dollars a month--$660 a year, which is once again about average GDP per worker back then. enough to buy 170 pounds of veal cutlets or 500 pounds of pot roast or 1000 pounds of bread. It was hard to economize on food at the start of this century: food and fuel consume almost half of consumer expenditure for the average household in 1885, but only a fifth of consumer expenditure in 1987. G.H.M.: his food bills are roughly a quarter of his annual expenditure, while my non-restaurant food bills are less than a twelfth of mine (and I buy a lot of food at a much more advanced stage of preparation today than G.H.M. could back a century ago). Somebody spending average annual GDP per worker on pot roast today could buy not 500 pounds but instead 25000 pounds.

Professor G.H.M cannot afford to live within walking distance of campus. He cannot afford to keep a horse and carriage. So he must use one of the new technologies of the 1890s, and bicycle to work. A single case of appendicitis costs $1200--the same multiple of an average worker's income that$160,000 would be today.

Last, note G.H.M.'s plea for culture: he and his wife's long and sophisticated education "has given us a refined appreciation of the drama, and we have a knowledge of and love of the best music. The annual football game is a social event which every loyal member of the college community is supposed to attend. We cut this out long ago. Grand opera exists for us only in the memory of our German days. Let us keep the spark alive by taking our wives once a month to a cheap concert; say $1" [a month]$12 a year--perhaps 1 1/2 percent of annual per-worker spending--to to hear perhaps 18 hours of live music played by professional musicians. And how little his family gets for it! Even the wealth of 1900 feels to us like grinding poverty. And G.H.M. does believe he is near-poor: just one racing shell-length ahead of the working class, of being barely able to afford the necessities and some of the conveniences of life.

Yet before we feel too sorry for G.H.M., reflect that working-class families at the turn of the century lived much more differently from Professor G.H.M. than working class families do from his successors today. A few miles east of the anonymous G.H.M.'s college in 1905 was the steel town of Homestead, Pennsylvania. Steel jobs were good jobs at good wages--hard, brutal jobs, but good jobs that people held on to as hard as they could and crossed oceans to get.

Few households in Homestead in 1900 had running water or a hot water heater. Water came in buckets from a faucet in the street into the house, and then heat it on the stove. In the–relatively prosperous for its time–factory steel town of Homestead, Pennsylvania at the start of the twentieth century, only one in six working class households had indoor bathrooms in 1910. Half of "Slav" and "Negro" families lived in one or two room houses. Most white families lived in four room houses. And most households in Homestead in their one or two or four-room houses had boarders: male, unrelated, single workers sleeping and eating in the house. The work of the housewife thus brought income directly into the household. Remember the three farmhands in the Wizard of Oz, set in 1890s Kansas? Odds are they slept in the house with Dorothy, her Uncle, and Auntie Em--or they slept in the barn.

A quarter of American households in 1900 had boarders or lodgers (compared to two percent today). Half of American households in 1900 had fewer rooms than persons (compared to five percent today). A quarter of American households in 1900 had running water (compared to ninety-nine percent today). An eighth of American households in 1900 had flush toilets (compared to ninety-eight percent today). Less than a fifth had refrigerators, less than one-twelfth had gas or electric lights, less than one-twentieth had telephones or washing machines, and of course there were no radios or televisions or vacuum cleaners or central heating, to list just those major appliances that have greater than ninety percent coverage today.

And even if you did have a four room house, could you afford to heat more than one room of it? Many Homestead four-room houses became two-room houses--the kitchen and the bedroom--in the depths of the western Pennsylvania winter.

The diets of workers in Homestead, Pennsylvania at the turn of the century were composed primarily of meat of widely variable quality, bread, butter, potatoes, oatmeal, and tea and milk–with luxuries such as sweets added in more or less regularly. We would find the diet somewhat monotonous (however, a lot of time and effort went into Þnding different ways to make potatoes). Almost always the first luxury that a working-class family moving up would purchase would be the services of a laundress: since laundry was expensive and difficult, few working-class families could maintain upper-middle-class standards of cleanliness. How often would you take baths if the water had to brought in from an outside pump, and then heated on the stove? How often would you wash your clothes if everything had to be washed out in the sink, if the fabrics were three times as heavy and the detergents one-third as powerful as the ones available today, and if as a result the laundry was a full day’s chore? Hand laundry was not a two hour a week task. Those who could afford the resources to maintain bourgeois styles of cleanliness flaunted it. White shirts, white dresses, white gloves are all powerful indications of wealth in turn of the century America. They said "I don't have to do my own laundry and ," and they said it loudly.

As a rule married women did not work outside the home–unless they were African-American, in which case they might well do their own family’s housework and be paid for doing a share of some white family’s housework as well. Meal preparation was not a one-hour-a-day but a four-hour-a-day task. Barring a shift toward larger-scale communal or cooperative living–a shift which simply did not happen even though anticipated, hoped for, and worked for by many feminists–within-the-household production and maintenance soaked up one-third the potential adult work hours. It made it next to impossible for married women (unless they were quite rich, or quite poor) to have independent careers and still fulfill the social expectations of household maintenance.

Infant mortality at the turn of the century was high. One in five babies in Homestead, Pennsylvania died before reaching his or her Þrst birthday. Adult men died, too, like flies (and adult women faced substantial risks in childbirth). Accident rates in the factory were such as to leave 260 injured per year–30 dead–out of a total population of 25,000 and a steel mill working population of 5,000. Each year, five percent were injured enough to miss work for some time (although only one percent per year were permanently disabled), and 1/2 percent per year were killed in factory accidents.

You can do the math. Start to work for U.S. Steel when you are 20. There is one chance in seven that the factory will kill you before you reach 50, and almost one chance in three that the factory will disable you. Is it any wonder that life insurance–disability insurance--group lodges that provide benefits (because the company provides few)--loom so large in American working class consciousness at the turn of the century? And is it any wonder that the Þrst component of the welfare state put into place, in many parts of the United States, was workmen’s compensation? Of course, in 1910 Homestead (or in 1930 Detroit, or in Los Angeles today) the most arduous and difficult jobs were done by minorities and immigrants: in 1910 Homestead by Slavs, in 1930 Detroit by Blacks, and in 2000 Los Angeles by Hispanics. At the micro level, such groups are concentrated in the most arduous and lowest-paid jobs because they are poor, because they have limited other options.

Most of the Homestead workforce only worked six days a week: for four out of five workers, the mill was shut on Sundays. U.S. Steel viewed this--shutting most of the mill on Sundays–as a major concession on their part, a concession that they hoped would produce large public relations benefits. From U.S. Steel’s perspective, each hour that a modern plant like Homestead stood idle was tremendously expensive. Variable costs--wages, raw materials, and transportation--made up perhaps 2/3 of total costs. The remainder were fixed: capital costs on the construction of the plant, and maintenance that had to be performed whether the plant was operating intensively or not.

Were U.S. Steel to move from two 12-hour shifts a day to one 12-hour shift, its output would be halved but its costs would be reduced by only 1/3, so total costs per ton of steel made would rise by 1/3. This was not a margin that U.S. Steel could afford. As long as it could Þnd workers willing to work the night shift, the Homestead mill (depressions and recessions apart) stayed open 24 hours a day on weekdays. And when things did change, they changed all at once-from two 12-hour shifts before and during World War I, to two 8-hour shifts (or three 8-hour shifts) during the 1920s, and during and after World War II. Yet Homestead jobs--at least Homestead jobs taken by native-born Americans--were good jobs by the standards of the United States. As historian Ray Ginger put it:

their expectations were not ours. A man who grew up on a Southern farm did not think it cruel that his sons had to work as bobbin boys [collecting spun thread in a textile mill]. An immigrant living in a tenement and working in a sweatshop yet knew that for the Þrst time in his life he was wearing shoes seven days a week...

And Homestead, Pennsylvania jobs paid well both by the standards of the United States and much more so by the standards of the world economy of the time. White households could make around \$900 (of 1910 value) a year, placing them well the upper third of the U.S. population in terms of income per household in 1910. Relative to what could be earned by people of similar skill levels anywhere else in the world, a job in the Homestead mill was a very attractive job. Even the unequal America at the turn of the century was a very attractive place compared to the rest of the world. America was exceptional. In spite of the hours, in spite of the risk of death or injury, in spite of the working conditions, these were very good jobs by international standards: jobs worth moving 7,000 miles for, from Hungary or Lithuania to suburban Pittsburgh. For the economy of the late nineteeth century was for the first time in human history a truly global economy, filled with long-distance trade and migration, so people could take advantage of the opportunities opened up by industrialization.