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Distribution of Wealth, and that, in distribution, not industrial functions, but industrial classes, should be considered, one would in a treatise on Wages at once proceed to state the problem of distribution, and to define the wages class as a party thereto. But, on the contrary, I shall be obliged to take up and explain with much particularity certain principles of Production and Population which can not safely be assumed for our present purposes, and also to deal at some length with a current theory respecting the remuneration of labor, which squarely blocks the way to a philosophy of Wages.
NOMINAL AND REAL WAGES.
A Distinction which needs to be apprehended with great clearness and held strongly in the mind, throughout all discussion of Wages, is that between Nominal and Heal Wages.
Real Wages are the remuneration of the hired laborer as reduced to the necessaries, comforts, or luxuries of life. These are what the laborer works for; these are truly his wages. The money he receives under his contract with his employer is only a means to that end; sometimes, as it proves, a most delusive means. If, as is the case with the great majority of his class, he spends every week or every month his entire earnings, he can see for himself, no matter how little given to reflection, that his wages are not his money, but what his money brings. If, again, he is frugal and forehanded enough to save a portion of his wages, and hoard it up or put it out at interest, it is still true, though not perhaps so evident, that this portion of his wages also means, in some near or distant future, " food, clothing, lodging, and firing" to himself or to his family. The habitual miser, the person who loves money for its own sake, is one of the most exceptional of human beings, the victim, doubtless, of a distinct form of disease as truly as the subject of alcoholism.
But this reduction of Nominal to Real Wages is not an easy matter. "No one," says Mr. Gr. R. Porter in his Progress of the Nation, "unless he shall have made the attempt to obtain information of this kind, can be aware of the difficulties opposed to his success."
Real may differ from Nominal Wages by reason of:
1st. Variations in the purchase-power of money.
2d. Varieties in the forni of payment.
3d. Opportunities for extra earnings.
4th. The greater or less regularity of employment.
5th. The longer or shorter duration of the laboring power.
I shall consider these causes1 in the order in which they are here given.
I. The purchase-power of money may vary by reason of changes in the supply of, or in the demand for, money. First, of changes in the supply of money.
(a) Changes of Coinage.—If a given amount of gold or silver be rendered into a greater number of coins than formerly, it is evident that each coin will purchase fewer commodities. Now when it is stated that the English "pound" of to-day contains less than one third the standard silver it contained in 1300 A.b.—12 oz. of English silver coin metal being now rendered into 66 shillings, whereas a shilling2 is nominally the twentieth part of a "pound"—and that the French livre of 1789 contained less than one sixty-sixth part of the silver implied in its name, the importance of this discrimination in historical comparisons of wages becomes manifest.
1 To the considerations enumerated must be added, as Mr. Ward lias shown, still another, in the case of laborers working by the piece. "When piece-work is done, you have to consider not only the price per piece paid, but also the conditions, as of machinery, etc. Thus the Hyde spinners in 1824 struck because they were getting less per piece than others, though all the time they were, by reason of improved machinery, actually earning more per day."—Workmen and Wages, p. 23.
2 The shilling in America suffered a still harder fate—twenty " York shillings" having the value of but $2.50, and 20 New-England shillings the value of $3.83. In Pennsylvania the " dollar" was, at different dates, worth 4s. Qd. ; 5s.; os 6d. : 6s. ; 6s. 6d.; 7s. ; 7s. 6tf.—Co]i~ well's Ways and Means of Payment, p. 99.
Even in comparison of contemporary wages, care has often to be taken lest coins of the same name but of differing value be confounded. Thus^ in the United States, the York shilling (eight to a dollar) and the New-England shilling (six to a dollar) were until recently liable to be taken for each other in calculation of prices. In the same way the English penny differs from the penny in use in the island of Jersey, of which it takes thirteen to make a shilling.
(b) Changes in the amount of the precious metals in circulation.—The history of the production of gold and silver is a history of often intermitted and always highly spasmodic activity. Thus in the year 800 there is supposed to have been on hand gold and silver to the value, as expressed in American gold coin, of $1,790,000,000. Between that date and 1492, the date of the discovery of America, with its vast reserves of mined and resources of unmined treasure, the estimated product was $345,000,000. Between 1492 and 1803 the product is given as $5,820,700,000; between 1803 and 1848, as $2,484,000,000; between 1848 and 1868, as $3,571,000,000. The effect upon prices wrought by such wholesale changes in the volume of the precious metals has long been discussed, and with great fulness, by economical writers, as influencing the wages of labor, producing a wide divergence between real and nominal wages in comparison of different periods; but we owe to Prof. Cairnes1 the demonstration that this cause is also influential in creating disturbances in contemporary wages, the effect upon prices being produced very irregularly as between countries, and as between different classes of commodities in the same country.
(c) Fluctuations in the paper substitutes for coin.—A paper currency purporting to be convertible into coin, but in
1 Essays on the Gold Question, 1858-60.
fact issued, in reliance on the doctrine of chances, in considerable excess of the amount of gold and silver held for its redemption, will undergo far more sudden and violent changes than would be possible with a gold and silver currency, or a paper currency based, dollar for dollar, upon the precious metals. The reason is that, as the excess of circulation over the specie basis consists of credit, and not of value, it is governed, both in expansion and in contraction, by the condition of credit, and not by the laws of value, as a value currency would be. It costs twice as much labor to raise two thousand ounces of gold from the mine as to raise one thousand ounces. It costs no more to engrave, print, and sign a thousand two-dollar than a thousand one-dollar bills. Since, then, a paper circulation may be increased without labor, all such currencies have shown a strong tendency to increase under every speculative impulse in trade, the currency allowing prices to advance, and the advance of prices, in turn, quickening the speculative impulse, and thus creating new demands for additional currency. When, however, prices have been carried to their height, and the market begins to feel the effects of highlystimulated foreign importations, while for the same reason the specie basis of an already dangerously inflated circulation begins to be drawn upon to pay for the goods thus brought in, the contraction of the currency will be even more sudden and extreme than was the expansion. Not a gold dollar can be taken away unless something is given for it; a bank-bill has cost nothing: it will cost nothing to replace it. It may therefore be destroyed without loss to the bank.
But while a wide divergence between Nominal and Real "Wages may be created by the alternate expansions and contractions of a currency issued on the doctrine of chances in excess of its specie basis, the disturbances hereby introduced into wages are slight compared with those caused by the issue of inconvertible government paper. Thus we find "Washington writing, during the Revo