milk, or about two cents a gallon. The wages of the girls who
milked them and my wages for driving them amounted to three cents
a gallon. In other words, the cost of labor in getting the milk
from the cows more than doubled the cost of the milk. This was my
first lesson in political economy. I learned that labor costs are
the chief item in fixing the price of anything.

The less labor used in producing milk, the cheaper the milk
will be. The reason wages were high in America was because
America was the land of labor-saving machinery. Little labor was
put on any product, and so the product was cheap, like the
landlord's milk. In the iron industry, for instance, the coal
mines and iron ore lay near the mills, as the landlord's pasture
was near his hotel. To bring the coal and ore to the blast
furnaces took little labor, just as my driving in the cows cost
the landlord but four cents a day. Next to the blast furnaces
stood the mixer, the Bessemer open hearth furnaces, the ingot
stripper building, the soaking pits and then the loading yards
with their freight cars where the finished product in the form of
wire, rails or sky-scraper steel is shipped away.

Because the landlord had his cows milked at the back door of
his hotel the milk was still warm when it was carried into his
kitchen. And so the steel mills are grouped so closely that a
single heat sometimes carries the steel from the Bessemer hearth
through all the near-by machines until it emerges as a finished
product and is loaded on the railroad cars while it is still
warm. It was this saving of labor and fuel that made American
steel the cheapest steel in the world. And that's why the wages
of steel and iron workers in America are the highest in the