CHAPTER V.

PROFIT AND LOSS.

64. The Beginnings of Industry.-Industry, in any proper sense of the word, develops, as wealth and values do, only with civilization. Savageism is a condition of intended indolence, broken only by the exertion rendered necessary as the alternative to immediate want of food, clothing, or shelter. The savage stops work when these wants are sufficiently supplied to yield him time for slumber or debauch. Such labor as is performed in savage life consists almost solely in the toil of appropriating or reducing to possession the wild game and fish, in capturing which a day's labor may be required to successfully appropriate enough for a meal. The entire toil of savages, therefore, in hunting, fishing, digging roots, and picking berries, consists of appropriation, which is not yet differentiated from production, and largely of a form of labor to which the well-to-do and nobles of aristocratic civilization return as the highest form of sport. Title, possession, and enioyment are acquired by one act, and that an act of manual force. No anterior pains have been taken by the savage to cause his game, fish, berries, or roots to exist.

So far as industry consists of mere appropriation, man's life does not rise above that of the beast of prey, and falls below that of the agricultural ants, which keep flocks and plant rice, and below the bees who collect and store honey and practice division of labor. The principles of accumulation, and of the organization of labor through rank, force, or slavery, evidently do not originate with man, but are amply illustrated in many orders of animals. They are, therefore, instincts of the animal organization, and not human inventions, or elements of character which man can choose whether he will have or dispense with.

When the savage ceases to be content with appropriating the means of food, clothing, and shelter, which can be had by hunting, fishing, digging roots, and snaring birds, and begins to plant seeds, dig the ground, tame and herd his wild goats and sheep, and set out fruit trees, he becomes a producer, and the form of his toil changes from hunting and fishing to industry. Production and

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industry, therefore, imply a degree of providence or forethought, in the production of things not immediately enjoyable; which forethought, and care for the future, are the germ of civilization. 65. Capital and Labor Part to be Partners.-Simultaneously with this beginning of industry, values or possessions divide into two kinds, viz., the enjoyable and the reproductive. The game which is shot is the enjoyable wealth. The bow and arrow used in shooting it are the reproductive. The former is exhausted by a single use, but ministers directly to human sustenance or comfort. The latter is capable of a long period of use, and only ministers indirectly to human want. The former is reward for effort, and approximates more or less closely to wages; the latter is means of production, or of appropriation, and soon begins to be called capital. The former is perishable, and must be used, if at all, immediately. The latter is persistent and may be used indefinitely. To work with the latter (reproductive wealth), to obtain the former (means of consumption), is industry. The man who owns his own implements of industry is said to be his own employer. If he does not own his own implements of industry, but is furnished them by another, and keeps the product of his industry, some return to that other is made for the loan of the implement. This return may be called rent if it be land leased, interest if it be money loaned, or profits if it be merchandise sold. If the worker with another's implements surrenders the product to the owner of the implements, the latter makes a return to the former for his work, which may be called also share, profit, or wages. If this return to the worker is proportionate to the value of the product obtained it is called share or profit. If it is irrespective of the product, but a definite payment for time and labor expended, it is called wages. The person owning the implements of industry, and employing others to work for him at wages, is called the investor, capitalist, enterpriser (entrepreneur Fr.) contractor, or employer. From the time the two functions of owning the means of labor, and furnishing the labor, become separated between two persons, the term industry covers the joint co-operation of the two; the term enterprise covers the function of the contributor of the capital or means of industry, and the term labor covers the act of working for wages, hire, or share. This division of men into those able to pay wages,* and those

"The ultimate partners in any production may be divided into two classes, capitalists and laborers. If the distributor be the capitalist, the share of the laborer is called wages. If the distributor be the laborer, the share of the capitalist is called either interest or rent." (Hearn's "Plutology," pp. 325-7.)

compelled to work for wages, arises in a state of developed or free society, and where labor is organized by capital, irresistibly out of the fact that of two persons having an equal start, one will hoard while the other spends, and the one will make while the other loses, until it comes to pass that one is able to employ while the other is glad to be employed.

Historically, however, the relation of employer and wagesworker, when traced backward, does not find its origin in any primeval Eden of social equality, but arises gradually in most cases out of an antecedent condition, a little more despotic and enslaving, known as boss and journeyman; and this originates in one still more arbitrary known as master and servant; and this in that of lord and vassal, until we get back to liege and bondman, and thence to patrician and slave (in Rome), citizen and helot in Greece, man and chattel nearly everywhere. The inequality deepens as we ascend to more primitive eras, until we reach a condition where the owner has every power over his working man, whether of death, mutilation, or sale, that he would over his ox. The races wherein the love of personal liberty prevented this degree of subjugation remained nomadic, unorganized, or merely tribal. If the spirit of subserviency facilitated such a despotic organization of society, as it did in India, Persia, Egypt, Babylon, Greece, and Rome, then national greatness was reached, at least in part, through a subordination of individual freedom that seemed to enslave all, even those that ruled.

The process by which despotisms thus organized emerged into the condition of wages-paying nations of employers and employed, was sometimes by sudden convulsion, as in the United States (South) in 1860-65, but generally by the gradual substitution of money for force, through the increase in the volume of the former, and through the greater economy of money than of force, in securing that subordination of will and concurrence of purpose without which there can be no extensive co-operation of labor.

66. Organization of Labor by Force.-In speaking of the organization of society by force, rank, or money, it must not be supposed that, in the period of force, force itself has the same distastefulness which it comes to have in the wages period. It is in the nature of the servile to be proud of their relations to those they serve, and to be happy in feeling that their lives are linked to a more stable means of subsistence than they could find in their own efforts. The henchman was proud of his laird, the page

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loved and honored his knight, and the slaves in many Southern families took intense pride in the families owning them, as do to-day the hereditary servants among aristocratic families everywhere.

The transition from the organization of labor by force, to that by wages, is sometimes made through a substitution of rewards in lieu of punishments, until these rewards, by custom, assume the form and regularity of wages. The master, in warlike periods, getting a new sword, presents his old one to his servant, who esteems the honor of wearing his master's sword as a species of knighthood. Or, in industrial periods, the master presents his servant with a house and garden, or, as in many Southern instances, even makes him ruler over other servants and foreman in his household. Thus the habit of command gradually gives way to that of purchase, and the habit of servility to the sense of independence. But presents, "tips," etc., remain to indicate the earlier system of favors or perquisites. Under the system of negro slavery in the United States, some of the slaves would get more material comforts by this system of presents, tips, and favors, than they could afterwards earn as wages. They would appear in their master's clothing, and jewelry, after it had been slightly worn. They had the advantage of medical attendance in sickness, and of an active interest in their health and welfare, which disappeared when they came to receive wages.

Stanley, in making his tour across the Dark Continent of Africa, bound himself to treat his 280 black servants, whom he employed to accompany him, kindly, to nurse and care for them in their sickness, to defend them against enemies, and "to be a father and a mother to them." The serfs and villeins of the feudal time, in entering the contract of homage or service, knelt on the ground before their protector with both hands in that of the master, and promised to be "his man, in life and limb and terrene honor." Where vassalage is thus implied on one side, and protection on the other, the wages system can hardly be said to have begun.

When the chief and his soldiers settled on the land, the exchange was at first a rent service, but gradually the element of service disappeared from rent, and it became a payment for the use of land. If the tenant's services were wanted they were at first compelled, and later employed. When society became so addicted to commerce that the laborer's time was bought and paid for like any other commodity, according to the relation which the quantity offered for sale bore to the quantity of money em

ployers were willing to pay, various theories succeeded each other as to the proper basis on which rates of wages should be determined. In the military and knight-errantry, feudal and baronial stage, it was held that the lord should have what befitted his station, and he took pride in seeing that his servants and retainers had what was befitting their station. The principle was equality as to substantials essential to life and comfort, discrimination as to the accessories which denote rank. This truth is accurately portrayed by Shakespeare in the crowning humiliation which overwhelms King Lear when he learns that his ungrateful daughters purpose to limit him as to his retinue of servants and as to their right to make merry over their wine. Abraham and Lot part company as much for their servants' welfare as their own. When the relation of master and servant was one of social rank, it was the master's pride and part of his means of control to provide for his servant as liberally as his station would permit. Indeed, the chief source of bankruptcy consisted in attempting to provide for more domestics and attendants than the master's income could be made to cover.

In getting upon the commercial basis, the English statutes show that for centuries it was assumed to be the duty of the ruling gentry to regulate hours of labor and rates of wages, always by enacting that they should not exceed certain rates, and by forbidding unions of workmen to obtain more. In no instance, says their chief historian* + did Parliament legislate to raise rates of wages, nor to restrain conspiracies among employers to keep them down.

At last, by the absorption of the land by the wealthy, the dispossession of the poor from their customary holdings, the rise of the factory system, and the growth of the capitalists and the wages class into widely separated and unsympathetic classes, labor, or more properly labor-time, became a commodity. Economists found an average rate of wages existing in each trade, about as steady as prices of goods or food or the value of money. What fixed this rate?

67. Adam Smith on Wages.-Adam Smith made a curious mixture of the errors which attend unrestrained a priori reasoning, and the felicitous effects of shrewd observation, in his “Chapter VIII." on the wages of labor. He began by supposing

Thorold Rogers' "Six Centuries of Work and Wages in England." + Adam Smith's "Wealth of Nations," by McCullough, p. 30.