of 10. On the other hand, with limited natural agents, after the condition of "diminishing returns" has been reached, the 100 may be able to produce only twice as much as 50 with a capital of 8x, or as 40 with a capital of 10x.

(b) The differences in the ratio between capital and the product of industry which are caused by the economical quality of a people, their intelligence, sobriety, and thrift, their capacity for self-direction and industrial organization, their manual dexterity and mechanical aptitude, are greater even than those due to the bounty of nature. Given machinery, raw materials, and a year's subsistence for 1000 laborers, does it make no difference with the annual product whether those laborers are Englishmen or East-Indians? Certainly if only one quarter part of what has been adduced under the head of the efficiency of labor be valid, the differences in the product of industry arising out of differences in the industrial quality of distinct communities of laborers are so great as to prohibit us from making use of capital to determine the amount that can be expended in any year or series of years in the purchase of labor.

I have no wish to disparage the importance of the service rendered in production by capital, the saved results of the industry of the past; but I firmly deny that it furnishes the measure of wages.

But while wages must in any philosophical view of the subject be regarded as paid out of the product of current industry, wages are, to a very considerable degree, in all communities, advanced' out of capital, and this from the very necessity of the case; while in those countries which have accumulated large stores of wealth, wages are, in fact, very generally, if not universally, so advanced, equally for

1 "Elle doit être avancée par le capitaliste et le retrouver, par conséquent, dans la valeur du produit obtenu."-A. E. Cherbuliez, Précis de la Science Économique, i. 415.

the convenience of employers and of the employed. Yet even where the entire amount of the weekly or monthly pay-roll is taken out of a store of wealth previously gathered and husbanded, it is not capital out of which wages are borrowed, but production out of which they are finally paid, to which we must look to find their true measure.1 I have said that in all communities wages are, by the very necessity of the case, advanced to a considerable extent out of capital. It is only in a few industries, mainly of the class termed "extractive," and in these only when pursued under circumstances peculiarly favorable, that the laborer can eat of the product of his labor for the day. The fisherman, indeed, or the hunter may live from hand to mouth, catching and killing as he eats, though always at the imminent risk of privation and even of starvation. But the tiller of the soil must abide in faith of a harvest, through months of ploughing, sowing, and cultivating; and his industry is only possible as food has been stored up from the crop of the previous year. The mechanical laborer is also removed by a longer or a shorter distance from the fruition of his labor. So that almost universally, it may be said, the laborer as he works is fed out of a store gathered by previous toil, and saved by the self-denial of the possessor. The extent of this provision, thus made the primary condition of industry, may be rudely measured by the interval between harvests. And this provision is one which is not made without great sacrifice, even in the most advanced stages of industry. Vast and varied as is the accumulated

1 Mr. F. D. Longe, in his Refutation of the Wage-Fund Theory, insists on this distinction. Of the wealth or capital used "for the maintenance of laborers while employed in producing new goods or wealth," he says, it "may come either from their (the laborers') own resources or those of their employers, or be borrowed from bankers or elsewhere." Of the wealth “to be used for the purchase of their work,” he says, it" may consist of funds belonging to the consumer or of funds belonging to the employer, or both, or may even be taken out of the very goods which the laborers produce, or their money value.”

wealth of the most highly-civilized communities, the store of food which must be kept on hand to meet the necessities of the year's subsistence constitutes no insignificant part of the aggregate value; while among nations which comprise, probably, two thirds of the human race, so severe is the struggle with nature, so hard are the conditions of life, so many its enemies, that, after all the painful accumulations of centuries, spring remains as it was in the days of Alkman, "the season of short fare," when the progress of the growing crop is eagerly watched, not with eyes greedy of gain, but with eyes hollow from hunger.'

To the extent of a year's subsistence, then, it is necessary that some one should stand ready to make advances to the wage-laborer out of the products of past industry. All sums so advanced come out of capital; but it is important to note that it need not be the capital of the employer. The laborer himself may be a capitalist to this extent. Where the reward of industry is as liberal as it is in America and Australia, there is no reason why a laborer should not save enough out of three or five years' wages to be a year beforehand, and thus, so far as the employer is concerned, that man's labor be thereafter freed from this condition of provisional maintenance. Moreover, even where the laborers' dependence on the employer for the year's subsistence is entire, it should be clearly noted (for it has been strangely overlooked,' with most unfortunate results in the

1 "There is in Ireland," says Alison, "what is called the 'starving season,' which is about six weeks before the new harvest.""-Hist. Europe, xxi. 204.

2 "A very little consideration will render it evident that laborers whilst engaged in any particular industry can not live upon the commodity which their labor is assisting to produce. The ploughman who tills the soil from which in the following autumn the harvest will be gathered, is fed with the wealth which his master has saved; or, in other words, the master pays his laborer's wages from the wealth which he has previously saved."-Prof. Fawcett, Political Economy, p. 19.

Here we find asserted or assumed, (1) the necessity of the laborer for

popular theory of wages) that this by no means involves the payment of his entire wages in advance of the harvesting of the crop or the marketing of the goods. There is nothing in the need the laborer has of provisional maintenance which defeats his claim to a payment, over and above the mere cost of his subsistence, out of the product when completed. It may be that poor Piers, the ploughman, must, as Professor Fawcett says, depend daily until harvest upon the squire for bread out of the crop of the last year; but surely that constitutes no reason why Piers should not at harvest receive some sheaves as his own. And in the case of all laborers of a higher class, whose wages may be perhaps twice or three times the cost of their bare subsistence, it is evident that, in countries where capital is scarce, the advances which are likely to be made to them during the year will leave a very considerable portion of the wages to be taken out of the product at the close of the year.

But how largely, in fact, are wages advanced out of capital? In old countries, to a very great extent certainly. Yet even in these there is but a small proportion of cases where wages are paid oftener than once a week—that is, where the laborer does not trust his employer with six days' work. And in some exceptional industries it happens that the employer realizes on his product' in a shorter

maintenance while the crop is growing; (2) his entire dependence on the employer for that maintenance; (3) the natural equivalency of subsistence and wages.

1 I may mention, in illustration, the case of transportation companies, owning railroads, canals, steamboats, or coaches. The employees of such companies in the United States number hundreds of thousands, and they are rarely paid by the day, commonly by the week or month. Yet the companies collect all their fares for passage and a portion of their charges for freight, daily. They are thus always in debt, often to a vast amount, to their laborers (using that term in its generic sense) for services which have been rendered to them, and of which they have availed themselves to the full extent. So that the

time than this, so that the laborer is not only paid out of the product of his industry, but actually advances to the employer a portion of the capital on which he operates. Quite as common, probably, even yet in countries which we may call old, as weekly payments are monthly payments; and here the probability that the laborer may receive his wages out of the price of this marketed product increases with the quadrupled time given the employer to dispose of it. Yet even here the cases are doubtless exceptional where the employer does not have to "stand out,' for a longer or a shorter time, of the amount which he pays in wages, though always, be it remembered, in the expectation of a reimbursement out of the product when marketed, the anticipated price of the product determining the amount which he can safely thus advance.

In new countries, by which we mean those to which men have gone with the industrial ideas and ambitions of older communities, but with an amount of capital which, from the necessity of the case, is more or less inadequate to the undertakings for which their skill and labor qualify them, the wages of labor are paid only partially out of capital. The history of our own country so amply illustrates this statement that we need not go elsewhere for examples. From the first settlement of the colonies down to the discovery of gold in California, laborers, whether in agriculture or in manufactures, were, as a rule, hired by the year, and paid at the end of the year. Bare subsistence might be furnished by the employer meanwhile; small amounts of money might be advanced "for accommodation;" the laborer's tax bill or doctor's bill might be settled by the employer; but these payments were not to such an extent (except in case of protracted sickness or sudden misfortune) but that the employer was always in debt to his laborer.

companies are virtually carrying on their operations on capital a portion of which is advanced by their own employees. Many other examples might be given.