Putting aside for the moment the several classes enumerated, we have plainly in view the real employing class of our modern industrial society: a comparatively small body of men, who control the destinies of labor no more than they do the destinies of capital. These men constitute a class strictly limited in numbers, and dealing most despotically, as indeed they must, with the outside world. The conditions of admission are a long self-initiation, a high premium of immediate loss, and a great degree of uncertainty as to ultimate success. Into this guild, in these modern days, no aspirant for profits needs to be inducted with ceremonies, or first invited by the existing membership. All are in theory free to enter; but the number who venture is closely restricted by the known conditions of business. Those only undertake it who are able, or, like the rowers of Mnestheus, think they are able, to sustain the ordeal of fierce and unrelenting competition; while those who have the courage to venture are continually sifted by commercial and industrial pressures and panics, so that only the fittest survive.

I have no wish to idealize the successful employer of labor. He may easily be found to be a very unamiable and a very uninteresting person. For the perfect temper of business something doubtless of hardness is needed, just as it is the alloy of baser metal which fits the gold for circulating in the hands of men. A little too much sensibility or a little too much imagination, is often a sufficient cause of failure in the stern competitions of business. The successful entrepreneur need not even understand the theory of trade, or be a financier in the larger sense of that word. A kind of subtle instinct often directs the movements of the ablest merchants, bankers, and manufacturers. They know that the market is about to experience a convulsion, because they know it; just as the cattle know that a storm is brewing. They not only could not give reasons intelligible to others for the course they take; they

do not even analyze their intellectual processes for their own satisfaction.

It is not necessary to draw the outlines of the representative entrepreneur. Living illustrations will rise before the mind of every reader, far more vivid than any art of mine could execute. M. Courcelle-Seneuil, in his Opérations de Banque, has grouped the qualities the employer should possess: "du jugement, du bon sens, de la fermeté, de la décision, une appréciation froide et calme, une intelligence ouverte et vigilante, peu d'imagination, beaucoup de mémoire et d'application." 1

2

I said that the real employing class is comparatively small. I do not speak alone of those employing workmen by the thousand or the ten thousand, or even of those alone whose pay-rolls count up hundreds of hands. If we go down to the captains of fifties and the captains of tens, it still remains true that the bulk of the wage-labor of England, France, Germany, and the United States, is controlled by a small, choice band of men, who are masters in industry because, whatever be their social quality, in industry they are masterly. To call these men the creatures of their workmen, and speak of the sums they exact in royalty on all the business which passes through their hands, as "the wages of supervision and management," seems to me as idle a fiction as it would have been to call the seigniors under the Old Regime the social representatives of the tiers etat, and to speak of the sums they lavished in pomp and pleasure, as their "allowances."

Are profits already at the minimum, so that we may

1 P. 392.

2 Thus, even in Austria, one of the most backward of European countries in the organization of industry, we find that 493 employers provide lodging for not less than 59,343 workmen. In France, Messrs. Schneider & Co. ("Le Creusot ") employ 10,000 workmen. Anzin employs 15,000 under a single direction. At the great cannon foundry of Krupp, at Essen in Westphalia, between 8,000 and 10,000 are employed. In Great Britain, like gigantic establishments abound.

not look to see an increase of wages obtained from this source? Much of what has been said relative to the asserted restoration to wages, of all sums which may go in excessive returns to capital, applies equally in the case of excessive profits, the remuneration of the man of business, the employer, the entrepreneur. It cannot safely be assumed that, to use Prof. Cairnes' phrase,' covetousness be held in check by covetousness, inasmuch as luxuriousness will inevitably enter to absorb a portion of such undue gains. But here still another reason appears, namely, that, as the part of the employer in production is active; not abstinence, as in the case of the capitalist, but exertion; in addition, then, to the effects of luxuriousness, excessive profits will, with no small proportion of employers, allow the native propensity to indolence and ease of life to enter to take something from the zeal and enterprise with which business is conducted. It is only the exceptionally ambitious and resolute who will wholly withstand this propensity. So that when Prof. Perry says, “If, in the division between profits and wages, at the end of any industrial cycle, profits get more than their due share, these very profits will wish to become capital, and will thus become an extra demand for labor, and the next wages fund will be larger than the last," 2 I am obliged to take the exception that a portion of these profits, so far as Prof. Perry includes in that term the gains of the man of business, will wish to become fine horses and houses, fine clothes and opera boxes; while another portion will wish to take the form of coming to the office an hour later in the morning and going home an hour earlier in the afternoon.

Hence, if we cannot safely assume that it is a matter of indifference to the wages class whether a little more or less goes in profits to the employer, it becomes of importance

1 P. 238.

• The Financier, August 1, 1874.

to inquire whether there is any reason to believe that profits are already at the minimum. And as to this, one can have no hesitation in saying that the probabilities are strongly against such a supposition. The present average rate of profits, or annual aggregate of profits, has notoriously been reached as the result of unequal competition, in which employers have been active, alert, and mobile, while laborers have been, in a great degree, ignorant and inert, resorting to the right market tardily, or mistakenly to the wrong market. It does not follow that because the laborers have lost heavily by this failure of competition, the employers have gained it all. Much has been lost to the laborers and to the world. Nowhere does the monopolist gain all that others lose by him. Yet the employing class have profited, and still profit, greatly by this partial immobility of labor. The lowest price which any laborer will receive for his services is no longer the highest price which any employer can afford to give.

In the first part of this work, when treating of production, I had occasion to show that the wages of the laborer might be increased in several ways without diminishing profits, the explanation being that the laborer's efficiency will be increased proportionally or more than proportionally. In dealing with the problem of Distribution, the laborer's efficiency will be assumed constant, and I shall inquire what causes may operate to increase the laborer's share of the product, not the absolute amount of his wages.

And, first, let it be noted that a gain might be effected through a reduction in what may be called the cost of employment, without involving any reduction in the aggregate profits of employers as a body. Let me illustrate: I was much struck at the complaints made at some of the meetings of agricultural laborers in England during the lockout of 1874, that many of the employers were harddrinking men and poor farmers, and that if they attended more closely to their business and managed it better, they

could afford to pay higher wages. Now no one should lightly credit the complaints of angry men ; nor was there any reason to suppose that the farmers of the lockout section comprised more than the usual proportion of dissolute and negligent employers. What occurs to me as notice able in this matter is the correctness with which these laborers apprehended the principle that when men who are unfit to conduct business force themselves into the employment of labor, it is at the expense of labor. The theory of competition assumes the intelligence and capacity of the employer to see and follow his own interests.1 His doing this is (assuming the mobility of labor) to be the very means by which the laborer's interest is secured. If the employer fails in this requirement of intelligence and capacity, it may be not the better but the worse for the laborer. Bad business management is the heaviest possible tax on production, and while the incapable employer gets little for himself, the laborer loses heavily in the rate or the regularity of his wages.

Now, several causes may help to swell the proportion of incapable employers. Shilly-shally laws relating to insolvency do this; fictitious currency does this; truck does this. Each of these causes enables men to escape

1 Errors in directing production are never offset one against another, as mistakes in computation so often are with a result of substantial accuracy. Whether the employer err in being too timid or too venturesome, loss is alike sustained, an injury is suffered which is without compensation. There is no balancing of one mistake against another in industry.

It is needless to say that the employer is almost always either too timid or too venturesome. The perfect temper of business, we might suppose, is found in no living man. But the sterner the responsibility to which the employer is held, the more steady and severe the competition to which he is subjected, the nearer will be the approach to this ideal, the less will be the waste in production due to mis-direction of the industrial force.

2 The evidence before the Committee of 1854 brought out strongly this feature of the truck system; that it was chiefly resorted to by