county valuations of which appear to have been unchanged from the days of the Plantagenets to the days of the Stuarts. So with the fee farm rents paid by freeholders, the labour, and subsequently the commuted rents paid by the copyholders. The principle that a tax should be unchanged was adopted in William III. land tax, an assessment which has never been revised after the lapse of nearly two centuries. So in arguing in the House of Commons, in 1881, in favour of a produce rent in Ireland, which the expectants of the unearned increment refused to accept, I ventured on predicting that an arbitrated money rent, that which the House of Commons ultimately adopted, would never be raised, but might be diminished. Time has shown that my prediction is verified.

I believe, indeed, that under ordinary circumstances the means of life were more abundant during the Middle Ages than they are under our modern experience. There was, I am convinced, no extreme poverty. His dues paid, the small farmer's property and profits were as secure as the landlord's domain. In this the condition of the English peasant was in marked contrast to the lot of the French roturier and the Teutonic bauer. There was but a small surplus population quartered on the products of the soil. The labour of the husbandman was not constrained, as in later times, to support a mass of idlers and consumers. But in other respects his condition was far less satisfactory. His diet, owing to the lack of winter food and nearly all vegetables, was unwholesome during half the year, when he was constrained to live on salt provisions. Leprosy and scurvy were common diseases in mediæval England. In the fourteenth century it is probable that life was healthier in the towns than it was in the country. In the seventeenth these conditions were reversed. In healthy seasons the death rate in London was 41 per thousand, in unhealthy times the deaths were double the births. In this same century, the deaths in country places were calculated at 29 in the thousand.

England suffered from occasional famines. Of these by far the most formidable were the harvest failures of 1315, 1316, and 1321, when incessant rain in summer destroyed the crop, as incessant rain always does. It would seem that at this time there must have been a considerable loss of human life. This is told us, indeed, by the chroniclers of the age, but there is a stronger proof than their

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narrative supplies, for the rate of wages rose 10 per cent. after the occurrence of the calamity. In this case, and in the far graver events which followed on the pestilence of 1349, the greatest increase was effected in what was previously the worst paid kind of labour, as, for instance, threshing oats and women's labour, for it is a law of prices which I have constantly verified by an examination of facts that, whenever a scarcity occurs in any necessary agent or product, the rise among the severally related forms of the service or product is always greatest in that which had hitherto been the lowest. Thus, in materials, when a scarcity occurred a quarter of a century ago in cotton, Surat produce rose vastly more than Sea Island did. Thus, after the plague to which I have just referred, the rise in the cost of threshing wheat was 33 per cent., of oats 88 per cent., while women's labour was paid double or treble its old prices.

It may assist us in illustrating the facts which will perpetually occur in dealing with economic history, if I state briefly what are the relations of the labour and the capital. Wealth is of two kinds, passive or unproductive, and active or productive, the former being constantly and regularly a reserve on which the latter may draw This double function of wealth explains the rapidity with which in times of exalted demand wealth is readily turned into the active form, profits increase, workmen are employed, and finally wages rise. Mr. Mill has alleged, and no doubt has puzzled you greatly by the allegation, that demand for commodities is not a demand for labour, a statement which contravenes all experience. Mr. Mill's error, and an error he acknowledged this famous paradox to be in the later years of his life, arose from his believing that wealth destined to active uses was at any given time a fixed quantity, just as at any given time a balance at a banker's is. But, in point of fact, the wealth available at any given time for the purpose of affording continuity to industry is a very indefinite quantity, is capable of great and sudden extension, especially in the form of loanable wealth.

The function of capital is to secure the continuous employment of labour, and as far as possible to equalise prices and profits. The labourer lends his labour for a week or a fortnight, or longer, to the employer, and it is easy to conceive, when a turnover is rapid, that

the employer has secured his profit long before he repays his workmen for the advance which the latter has made to him. In the great majority of cases, however, the profit of the employer is postponed till long after he has repaid his workman. But the principal service which the employer does is to give the labourer the prospect of continuous employment, and as the division of employments is developed, and human labour is aided, or perhaps displaced, by costly machinery, the expediency of finding continuous employment for labour is stimulated by the knowledge that the cessation of employment would be a rapidly growing loss. Again, it is the business of the capitalist employer to maintain as far as possible an equal money value or price. The most violent fluctuations of price occur when the producer is constrained to sell at the discretion or demand of the buyer. But the capitalist dealer withholds his goods from the market until such time as he can command his price, and the shrewdest producer or dealer, the man who in the long run commands the best service, and gains the largest profits, is he who can anticipate with the greatest accuracy the demand of the market.

I refer to these facts, in which what I am stating will not be found to differ materially from the views entertained by most economists, because, at the present time, the crudest ideas are afloat about the relations of labour and capital, in which the functions of the latter are vilified, and a violent competition is proposed between the state on the one hand, that is, all who have no property, and the private capitalist on the other. The experiment of the state, or rather the taxpayer, finding competitive capital has been tried. It was the theory of Elizabeth's last poor law, and it failed disastrously, to the condign misery of the workman, a misery prolonged for centuries, as I hope to show. Nothing is gained by exaggerating the benefits which capital confers. Nothing will be gained by depreciating its real services. It has been shrewdly observed that capital and labour are like the two blades of a pair of scissors, powerless apart, but apt to their function when properly fitted.

Now all economists agree, that profits in the general sense are made up of three elements, interests on advances, whether made from his property by the capitalist agent, or supplemented by loans from

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those who, being unable to employ their own wealth, are willing for a consideration to lend it to others. The rate of interest is high when loan capital is scarce, low when loan capital is abundant. But it is always a measurable quantity. A second element is risk, a quantity which cannot be measured, for if it were measureable it would cease to be risk, but must be estimated. It varies exceedingly in different callings. It is probably greatest in the case of the agriculturist, particularly if his principal culture is exposed to numerous unforeseen accidents. I mention this mainly to show how serious an element risk is, in the tender of an agricultural rent. In the course of these lectures I shall be able to give numerous illustrations from economical history of the disturbance which this contingency has caused. The third is the labour of superintendence; the time, toil, anxiety, skill which the capitalist employer must give to the details of his business. To these one may add a fourth, which is, perhaps, only a modification of the second, the inevitable wear of implements, and the rapidity with which machinery becomes obsolete or comparatively inefficient. Now it will be plain that, in the language of logicians, the first two elements of profit are objective, i.e., they are external to the agent, and determined by conditions which the agent cannot control. The third, his own labour, is subjective, and it is plain that on this his real profits depend. Our analysis, therefore, shows that the capitalist employer is a labourer, and that his remuneration depends entirely on the efficiency of his labour. Whether or no he gets too much in the distribution of the gross value is another question, but the more necessary workmen make him, by being as much as possible unlike him, the greater will be his share.

Now let us turn to the recipient of wages, the labourer or workman strictly so called. The Greek philosophers, by a happy generalization, called him uxor opуavov, a living machine, and the phrase is far more significant to us than it was to them, for they degraded labour by permitting slavery. The labourer in our days is a machine which has been constructed at no little cost; but far more important than the cost is the aptitude, whether it be hereditary or imitative, with which the civilized man grapples with industrial avocations. You have all of you seen many of those wonders of medieval art, the great cathedrals and churches of this

or

country, indeed of Western Europe. In most cases, the architects of these marvellous works are unknown, for the very sufficient reason that they were designed by workmen. The mason carpenter who can draw out his plot, i.e., furnish the design of the structure which his hands set up, is mentioned over and over again in our early Statute Book. Familiar as I am with agriculture, I am constantly amazed at the numerous accomplishments of a first-class farm-hand, who is most fit by the multiplication of his employments, as the artizan or factory hand is by their division. He will draw a furrow across a hundred-acre field with a precision of an artist, and prove the correctness of his eye, by the completeness with which he finishes the field. To make a serviceable ditch with its proper inclination is no slight feat. To build and thatch a rick squarely, to trim a hedge neatly, to reap and mow evenly require much practice and skill. The shears which the shepherd plies are rude instruments, but in practised hands they do their work deftly. A good farm-hand generally knows as much practical husbandry as his employer, and is as skilful in the treatment of cattle as a farrier. On such training as this interest has to be paid, as surely as on the property or loans of the employer. The form it takes is in sufficient income for the industrial education of his successors, and the fortunes of a country will decline if the successor is not forthcoming, or if folly drives him away from his native soil.

The element of risk, the inevitable wear, and the ultimate extinction, of this living instrument are manifest enough. His remuneration must cover this contingent charge, or it must be covered at the expense of others. The machinery of the English poor law enables the employer, who reaps the profit of the workman's labour, to transfer to the shoulders of all occupiers the insurance of the labourers' risk. To be sure, with commendable forethought, the best workmen, either through benefit societies or labour partnerships, seek to effect their own insurance. In the Middle Ages they did it through their guilds, purchasing lands and houses all over England for charitable service to their own order. Unluckily for them, the piety of the age considered prayers for the dead to be a charity, these guild lands were confiscated on the plea that the use was superstitious, and people wonder that workmen became improvident. The London guilds made ransom, with the result that the charitable

as