CHAPTER VII.

WAGES.

II.

THE next point for consideration is the fund from which wages are derived. What is it that enables an employer to purchase the services of labourers in production ? That fund is capital; and capital, we have seen, is that portion of the existing stock of machinery and commodities which is intentionally applied to the creation of fresh wealth. This proposition Professor Walker, in his able work on Wages, denies. He rejects the assumption that wages are paid out of capital, the saved results of the industry of the past. "On the contrary, he holds that in a philosophical view of the subject wages are paid out of the product of present industry." But he refutes his own view by admitting that in almost all cases wages are advanced out of capital. The cases are indeed few in which the fruits of the labour are so rapidly gathered that they actually pay the wages of the labourer. A fisherman may pay a sailor for the day's work by the sale of the fish as soon as the boat reaches the shore. But such events are rare and unimportant. The farmer's case is that of most industries. He must wait a year before he can replace out of the harvest the capital consumed in feeding his labourers

and his horses. The building of a steamship may take two years before she can be sold. A bad harvest may strip the farmer of a large portion of his capital; the ship may fetch only a price much smaller than what she cost to build. The cost of production is first provided out of the consumption of pre-existing capital.

But there is, on the other hand, a real and essential connection between what industry at work produces and wages. The employer must recover from new wealth made what he had destroyed in keeping up the labour or he will give up the business. He will cease to hire labourers, and wages will disappear. He may for a time go on producing at a loss, relying, like the farmer, on an average of years; but if the business and its distribution of wages are to continue, the vital condition that his capital shall be replaced with a reward for himself, must be fulfilled. In this sense wages clearly depend on the future results of industry.

From this cardinal fact, that wages are paid out of capital, comes forth the fundamental principle that the sellers of labour have the strongest interest that the means of purchasing what they have to sell should be as large as possible. The greater the number of buyers of labour, the more plentiful the means which they have of buying, the better price, the higher wages will the sellers obtain. Everything which makes the employer eager to give wages is good for the workman. Much the largest portion of existing capital is spent in wages; that is the labourers eat, drink, and consume the greatest part of the stock of wealth in the country. The saying, attributed to Mr Cobden, rightly declares that when two employers are seeking one man

wages rise; and the thing which creates the two employers is the existence of increased capital. Every act or policy, therefore, which has the effect of diminishing capital already in existence or of preventing its increase is obviously injurious to the interest of those who live by wages, and if deliberately designed to produce that effect is suicidal irrationality.

Another consideration carries great weight in this matter, and indeed in all the relations between labour and capital, and that is the manner in which capital is created. Except what nature gives as it were to start with, capital is the result of an act of the human will. It is derived from wealth, from commodities already produced, which their owner deliberately resolves not to consume in luxurious enjoyment, but to apply as instruments to the creation of fresh wealth. He saves this wealth by abstaining from the increase of his gratifications, and this is a personal act. It proceeds from a clear motive. The saver wishes to become richer, to be better off. He makes a sacrifice for the sake of the ulterior object, which he prefers. Obviously in proportion to the strength of the desire will be the amount of the saving; and that desire will necessarily be influenced by the success it can achieve in obtaining the end desired, increase of fortune.

If profits are large, and the opportunities for extending business multiply, the tendency to save gathers strength, and capital rapidly accumulates. But if profits are low and are likely to become lower still, the effort to save is weakened, and the feeling is apt to arise that it is not worth while to lessen present enjoyment for the sake of a small increase of wealth. What policy,

then, can be more mischievous for the earners of wages than to discourage by direct hostility the saving of capital? They act directly on the feeling and motive to save by proclaiming the capitalist to be the enemy of the labourer. Yet it is by capital that they live. They are sellers of labour, and it is capital alone which buys it. They have no stronger interest than that the buyers of the article from which they obtain subsistence should be many and full of means. To dishearten them and to turn them away from the labour market is the most ruinous of proceedings. If the capital of a nation does not increase, its state must, at the best, be stationary. The labourers cannot raise either their position or their numbers. The desire to save may still survive, but the capital won, and the commodities to give to labourers, will be sent to foreign lands in search of better profit. The mistaken ideas of many unionists may easily drive English buyers of foreign labour to distant countries. They will send out English wealth-goods, be it remembered, not money-to be invested in foreign industry. They will reap a reasonable interest; but the English sellers of labour will have lost buyers and their wealth.

We now reach an element of supreme importance, the nature and quality of the article bought with wages. In every market, and in every exchange, the two fundamental questions always are, what is the kind of thing which is bought, its nature and character; and secondly, how much ought to be given for it? What is its value? The article which an employer intends to purchase with wages is efficient labour, that is, so far as depends on the labourer himself. The expression, efficiency of

labour, has a much wider meaning than the goodness of the work performed by the labourer, but this will come into consideration later. The man who engages to pay wages to another in return for labour, proceeds on the supposition that he will work well; and as Mr William Denny justly observes in his excellent pamphlet on "The Worth of Wages," "round this turns the whole question of our manufacturing prosperity." The employer hires the use of the faculties of mind and body of the labourer, his bodily strength, his intelligence and skill, and also a particular manner of using them. This is a capital point in the quality of the article purchased; for on the manner of his work the value of the labourer to the man who contracts to give him wages depends. He is a purchaser of good work, and good work turns on the manner of working.

It follows from these facts that moral qualities are understood to be bought in engaging a labourer; care, diligence, honesty of purpose, self-respect, good will, and, what Professor Walker well calls, hopefulness in labour. These qualities are as intentionally purchased in hiring a labourer as beauty of colour is in a silk dress. The presence or absence of these qualities makes the work given in exchange for wages good or indifferent. The goodness and amount of the work performed constitute the worth of wages; and if wages do not obtain their worth, do not receive an equivalent for the money given, the work will at last stop altogether and wages will cease. Happy would it be for the working classes if they grasped the vital truth that labour is bought solely for the sake of what it produces, and that if the man who purchases it does not receive