It introduces a new and unjustifiable basis of wages-that wages shall be paid on the basis of what it costs the recipient to live. If it is urged, for instance, that a woman cannot live on $5.00 a week, but can live on $8.00 and hence her minimum wage should be $8.00, the whole case has not been considered. If we accept-what we should not accept-the principle that wages should be related to the cost of living, and if it is accepted that the woman could live on $8.00 a week, on what grounds should she ever receive more than $8.00 a week? On what grounds could any one get $18.00 a week? At present $18.00 is paid on the ground that it is earned, that is, on the basis of a relation between wages and producing power. No other basis can stand for a moment in the actual work of industry. Men go into business to gain profit; if, in their opinion, the employee is not worth $8.00 a week, she will not be retained, no matter what it costs to live. If she is worth to the business $18.00, that will be the wage. No law can force anyone to remain in a business that does not pay.

The theory of a minimum wage based on the cost of living is flatly inconsistent with the facts of daily life and preparation for any occupation. At what age or point is a beginner, or apprentice, to receive the full legal wage? Is no boy, or apprentice, to be allowed to receive a partial reward till he is a full-fledged adult workman? How about the woman, who, in the economic role of domestic labor, knits stockings in odd hours in order to add a little to the family income-shall she receive nothing if not the full legal wage? Shall the boy, or even a young lawyer just entering an office, be forbidden. to receive the small stipend of the preparatory period?

Suppose it were required by law to pay shop-girls $8.00 a week instead of $5.00 on the ground that the insufficient $5.00 leads to vice; then, since no ordinary business would pay $8.00 unless it were earned, those who did not earn $8.00 would inevitably be dropped from employment without even the help of $5.00 to save them. If $5.00 is no protection from vice, how much less is no wages at all? This proposal of a minimum wage is directly opposed in practice to the very self-interest of the girls themselves.

It is crass to try to remedy wages which are admittedly too low by fixing a legal minimum wage, which can never be enforced unless private business establishments are to be regarded as state institutions. In a state factory, wages may possibly be determined by law, but not in open competitive business conditions, where the supply of labor has as much influence on wages as the demand. If the supply of women wage-earners converges on only certain kinds of work, wages will be lowered by the very large supply of the workers.

There is no exit by this door of legal enactment as to the amount of wages.

The true and immediate remedy is the creation of ready means by which the industrial capacity of the wage-earning women will be increased. The wrong situation-of which low wages, possible starvation, and the temptation to vice are only symptoms-is due primarily to the fact that women thrown on their own resources know no trade and crowd each other in the market for unskilled labor. The remedy lies in the creation of places of instruction where any woman (no matter how poor) shall be taught a trade and have skill given her by which she can obtain a living wage.

The remedy lies in preventing a congestion of unskilled feminine labor by industrial education. There is no other rational or permanent or human way out of the present wretched situation, if we have the real interest of the workers at heart—and are not interested chiefly in getting some cheap political notoriety.

This conclusion applies to men as well as to women. Is not a skilled carpenter worth more than a blunderer? In any business, does not every one agree that it is fair to give a very energetic, live, active, skillful salesman more than a stupid? If he is skilled he earns more, because he brings in more business. That being settled we do not fix his wages on what it costs him to live. He has a right to spend his income as he pleases. Hence, if we were to adopt the theory of the minimum wage we should be adopting a new theory of wages, which would justify the refusal to pay higher wages based on efficiency.

The only real permanent aid to low wages is to increase the productivity and skill of the persons at the bottom. Instead of talking of such injurious palliatives as minimum wages, create institutions at once where those persons can be given a trade or training for a gainful occupation. The cry for a minimum wage is evidence of the industrial incapacity, the lack of producing power, in masses of our people. The concrete ways of increasing the productive power of each man and woman are not unknown. Moreover, the captain of industry can introduce carefully worked-out plans for helping his operatives to rise in life; to better conditions by welfare work; to encourage savings and thrift; to introduce the stimulus of profit sharing; and above all, establish civil-service methods devised to pick out and promote the promising youth so that the path from the bottom to the top is open to every employee. Under unrestricted competition, there will be seen the inevitable results of 'natural monopoly' by which superiority comes to its own, and wages are in some proportion to productive power.

279. Wage-Settlement by External Authority"

BY S. J. CHAPMAN

The fundamental objection to the settlement of wages by external authority is easily formulated. New needs are constantly arising; and it is partly by the spontaneous emergence of new needs, changes in the proportions of needs, and the satisfaction of new demands, that society progresses. It will not be inferred from this statement, of course, that caprice and vacillation in demand are good. It is to the immediate gain of the community that production should react speedily upon the fresh calls made upon it, since thereby the most satisfaction is elicited from a given quantity of producing power. Further, it is to the ultimate advantage of the community that this rapid response of society on its productive side to society on its consumptive side should be forthcoming, since thereby imagination is quickened and the way is laid open for further progress. By the satisfaction of old wants scope is given for the expression of new wants. Progress does not mean merely change of wants, apart from the character of the change, but change is so essential as to be a presupposition of progress. The general disappointment of aspirations saps social vitality. Again, a great economy results from international specialism following the divisions marked out by national differential advantages for the production of certain goods. These relative advantages are variable, and therefore the industries of a country with much foreign trade will wax and wane relatively if the results are to be procured from its productive power.

Now rapid alterations in the industrial field, in response to the varying circumstances that we have outlined, can be secured only if public demand is transferred direct to capital and labour through the medium of the employers' demand for them. If it is, the industry. that should contract naturally contracts because it offers small profits and wages below the normal level, while the business that should expand naturally expands on account of its exceptional remunerativeness to all factors which engage in it. Once unlink the existing close connections between public demand and wages, and a large proportion of the nation's productive power will be regularly misapplied, unless or until settlement at comparative stagnation is induced. Moreover, the best will not be made of the aptitudes and tastes of the individuals of whom society is composed. No arbitrator can in the nature of things possess sufficient knowledge of the demand for, and supply prices of, labour to enable him to declare the relative wages that are best in the long run for the community as a

"Adapted from Work and Wages, II, 260-264. Copyright by Longmans, Green & Co. (1904).

whole. The chances are that in many of the awards serious mistakes will be made; after some time, it is true, the awards are revised, but it is then too late for all the damage inflicted to be repaired, and there is again no surety that the errors will be corrected. This is no plea for stringent laissez faire; State intervention in the interests of life and health, and combinations to render more effective the bargaining power of labour and the demand of labour for pleasant conditions, are quite different in principle from the surrender to courts, which can never have before them the data to enable them to do the right thing in the settlement of relative remunerations as between the numerous classes of labour and other factors in production. Το use an analogy, the problem is to deduce from a person's constitution how much food he should take each week for the next six months. Who shall say? For who shall deduce from the parts of the organism their joint needs now and for the next few months? Fortunately, nature solves the riddle by giving to such organisms appetite. In the social organism the analogous regulator is to be found in individual demands.

There are two further dangers. The one is that, though some State action may give scope to individual initiative-by which we advance-another kind of State action may weaken it. The other danger arises from the fact that distribution is so linked to production that complexity in the one necessitates complexity in the other. If society is incapable of assuming a more intricate system of distribution, further complication for the improved economic working of the productive system is retarded. Industrialism is relatively simple in form and limited in extent in the Australasian Colonies. Agriculture is the chief occupation, and this being untouched by the arbitration laws is a vent for any labour or capital driven out of the industries. Hence the settlement of wages by boards with power may not very seriously diminish prosperity. But it would in a country with more involved productive arrangements, where the loophole of escape from onerous decisions was less adequate. Progress would be impeded until the artificial system was repudiated, and the old lesson that had been forgotten of the self-settlement of wages under simple conditions had been learned afresh.

Besides, lastly, there is the unwholesomely close association between politics and self-interest. What would be the state of democracy in the next generation if wage-earners regarded the government as one of the chief arbiters of wages, as they might easily do when, according to their experiences, wages had been settled, as a rule at least, if not invariably, in a Court, State instituted and State supported, the awards of which were enforced by the State?

280. A Minimum Wage for Immigrants3°

BY PAUL U. KELLOGG

My plea is to draft into our immigration law the provision that no immigrant who arrives here after a specified date shall be permitted to hire out to a corporate employer at less than a living wage, say $2.50 or $3.00 a day-until five years are elapsed, and he has become a naturalized citizen. When he is a voter, he can sell his American workright for a song if he must and will, but until then he shall not barter it away for less than the minimum cash prize, which shall be determined as a subsistence basis for American family livelihood.

It would be neither the intent nor the result of such legislation to pay newcoming foreigners $3.00 a day. No corporation would hire Angelo Lucca and Alexis Spivak at $3.00 as long as they could get John Smith and Michael Murphy and Karl Schneider for less. It would be the intent and result of such legislation to exclude Lucca and Spivak and other "greeners" from our congregate industries, which beckon to them now. It would leave village and farm and country open to them as now. And meanwhile, as the available labor supply fell off in our factory centers, the wages paid Smith, Murphy, Schneider, and the rest of our unskilled labor would creep up toward the federal minimum.

First a word as to the constitutionality of such a plan. It would be an interference with freedom of contract; but the contract would lie between an alien and a corporation; between a non-citizen and a creature of the state. I have the advice of constitutional lawyers that so far as the alien workman goes the plan would hold as an extension of our laws regulating immigration. On the other hand, the corporation-tax laws afford a precedent from setting off the corporate employer and regulating his dealings.

For three special reasons my belief is that the general enforcement of such a law would be comparatively simple. Sworn statements as to wage payments could be added to the data now required from corporations under the federal tax law. This would be an end desirable in itself. In the second place every resident worker would report every violation that affected his self-interest or threatened his job. For my third reason I would turn to no less a counsel than Mark Twain's Pudd'n Head Wilson. With employment report cards half a dozen clerks in a central office in Washington

30 Adapted from "Immigration and the Minimum Wage," in the Annal. of the American Academy of Political and Social Science, XLVIII, 75-77 Copyright (1913).