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.
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