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.

I have before me a considerable collection of accounts taken from the books of farmers in different sections as late as 1851. These show the hands charged with advances of the most miscellaneous character. There are charges for grain and salted meats from the product of the previous year, for cash for minor personal expenses, for bootmaker's bills, grocer's bills, apothecary's bills, doctor's bills, and even towntax bills, settled by the employer, for the use of teams for hauling wood for the laborer, or breaking up his garden in the spring. Yet in general the amount of such advances does not exceed one third, and it rarely reaches one half, of the stipulated wages of the year. Now it is idle to speak of wages thus paid as coming out of capital. At the time these contracts were made the wealth which was to pay these wages was not in existence. At the time these services were rendered, that wealth was not in existence. It came into existence only as the result of those contracts and the rendering of those services.

Not less distinctly did this system of paying wages prevail in the department of manufacturing industry during the same period. Extensive inquiries have satisfied me that manufacturers in New-England did not generally leave off paying their workmen by the year until after 1854 or 1855. Some of the more successful were able to make the change to quarterly or monthly payments as early as 1851. A gentleman conducting one of the largest, oldest, and most successful manufacturing establishments in Massachusetts informs me that, up to the earliest of the dates mentioned, his firm paid their workmen yearly; and any hand requiring an advance of wages on work done was charged interest at current rates to the end of the

year.

Now in this there was nothing unjust or ungenerous. Such an arrangement was the very condition on which alone the industry could be prosecuted, on which alone employment could be given. Capital was scarce, because the country was comparatively new; and if wages had been

measured by capital, wages must have been low; but at the same time production was large,' because natural agents were copious and efficient, and labor was intelligent and skilful, and as it is production, not capital, which affords the measure of wages, wages were high; but the workmen had to wait for them till the crop was harvested or the goods sold. And this they gladly did, and never for an instant suspected they were being paid out of capital; indeed, they knew better, for they had seen growing under their hands that in which they were finally paid. In the Middle States the change referred to came a few years later than in New-England; yet by the outbreak of the civil war monthly or weekly payment of wages had probably become more general than payment by the year.

Farther to the West and South the change to monthly and weekly payments has, in many sections, not yet begun. In these parts of our country the payment of wages out of capital is scarcely more common than it was in New-England a hundred years ago. The employer advances to the laborer such provisions and cash as are absolutely required from time to time; but the "settlement" does not take place until the close of the season or of the year, and the final payment is often deferred until the crop is not only harvested but sold.

But whether wages are advanced out of capital in whole, or in part, or not at all, it still remains true that it is the product to which the employer looks to ascertain the amount which he can afford to pay: the value of the product furnishes the measure of wages. When the employer shall pay is a financial question; what he shall pay is the true industrial question with which we have to do in treating wages. This is determined by the efficiency of labor under the conditions existing at the time and place.

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Capitalists and laborers receive large remuneration in America because their industry produces largely."-J. E. Cairnes, Some Leading Principles, etc., p. 462.

CHAPTER IX.

THERE IS NO WAGE-FUND IRRESPECTIVE OF THE NUMBER AND INDUSTRIAL QUALITY OF LABORERS.

WE can not well go farther in our discussion without con- . sidering a theory of wages which has been very generally accepted by the political economists of the English school, namely, that of a Wage-Fund.

The doctrine is in substance as follows:

There is, for any country, at any time, a sum of wealth set apart for the payment of wages. This fund is a portion of the aggregate capital of the country. The ratio between the aggregate capital and the portion devoted to the payment of wages is not necessarily always the same. It may vary, from time to time, with the conditions of industry and the habits of the people; but at any given time the amount of the wage-fund, under the conditions existing, is determined in the amount of capital.

The wage-fund, therefore, may be greater or less at another time, but at the time taken it is definite. The amount of it can not be increased by force of law or of public opinion, or through sympathy and compassion on the part of employers, or as the result of appeals or efforts on the part of the working classes.1

1 "That which pays for labor in every country is a certain portion of actually-accumulated capital, which can not be increased by the proposed action of government, nor by the influence of public opinion, nor by combinations among the workmen themselves. There is also

The sum so destined to the payment of wages is distributed by competition. If one obtains more, another must, for that reason, receive less, or be kept out of employment altogether. Laborers are paid out of this sum, and out of this alone. The whole of that sum is distributed without loss; and the average amount received by each laborer is, therefore, precisely determined by the ratio existing between the wage-fund and the number of laborers, or, as some writers have preferred to call it, between capital and population.'

The wage-fund having at any given time been determined for that time, the rate of wages will be according to the number of persons then applying for employment." If they be more, wages will be low; if they be fewer, wages will be high.

I have stated this doctrine minutely, with something of iteration, and with full quotations, in order to avoid all suspicion of misrepresenting that which I propose to assail. An excellent summary of the doctrine is that given by Mr. John Stuart Mill, in the Fortnightly Review for May, 1869, as follows:

"There is supposed to be, at any given instant, a sum of wealth which is unconditionally devoted to the payment of wages of labor. This sum is not regarded as unalterable, for it is augmented by saving, and increases with the pro

in every country a certain number of laborers, and this number can not be diminished by the proposed action of government, nor by public opinion, nor by combinations among themselves. There is to be a division now among all these laborers of the portion of capital actually there present."-A. L. Perry, Pol. Econ., p. 122.

The circulating capital of a country is its wage-fund. Hence if we desire to calculate the average money-wages received by each laborer, we have simply to divide the amount of this capital by the number of the laboring population."-H. Fawcett, Economic Position of the British Laborer, p. 120.

2" The demand for labor consists of the whole circulating capital of the country. * * * The supply is the whole laboring popula

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tion."-J. S. Mill, Fortnightly Review, May, 1869.

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