lse by the
journeyman at his home,--all being paid by the piece. This was the
notorious "sweatshop system."

The contractor or sweatshop boss was a mere labor broker deriving his
income from the margin between the piece rate he received from the
merchant-capitalist and the rate he paid in wages. As any workman could
easily become a contractor with the aid of small savings out of wages,
or with the aid of money advanced by the merchant-capitalist, the
competition between contractors was of necessity of the cut-throat kind.
The industrial class struggle was now a three-cornered one, the
contractor aligning himself here with the journeymen, whom he was forced
to exploit, there with the merchant-capitalist, but more often with the
latter. Also, owing to the precariousness of the position of both
contractor and journeyman, the class struggle now reached a new pitch of
intensity hitherto unheard of. It is important to note, however, that as
yet the tools of production had not undergone any appreciable change,
remaining hand tools as before, and also that the journeyman still owned
them. So that the beginning of class struggles had nothing to do with
machine technique and a capitalist ownership of the tools of production.
The capitalist, however, had placed himself across the outlets to the
market and dominated by using all the available competitive menaces to
both contractor and wage earner. Hence the bitter class struggle.

The thirties witnessed the beginning of the merchant-capitalist system
in the cities of the East. But the situation grew most serious during
the forties and fifties. That was a period of the greatest
disorganization of industry. The big underlying cause was the rapid
extension of markets outrunning the technical development of industry.
The large market, opened first by canals and then by railroads,
stimulated the keenest sort of competition among the
merchant-capitalists. But the industrial equipment at their disposal had
made no considerable progress. Except in the textile industry, machinery
had not yet been invented or sufficiently perfected to make its
application profitable. Consequently industrial society was in the
position of an antiquated public utility in a community which
persistently forces ever lower and lower rates. It could continue to
render service only by cutting down the returns to the factors of
production,--by lowering profits, and especially by pressing down wages.

In the sixtie