added to a community without bringing with them any capital at all, yet the per capita product be actually increased thereby. It is insight into this condition of production that gives motive to the exertions put forth by almost every Western and Southern State, and almost every Western and Southern county, to attract immigration. Capital they want, and they would much prefer immigrants with capital; but they want immigrants anyhow. These communities are not acting foolishly. They are not calling in additional laborers to divide with them a predetermined product. They know perfectly well that the product will increase as the producers increase, and that, in their situation, the product will increase faster than the producers; and therefore that each producer may have more, and not less, by reason of the arrival of immigrants. Laborers have come to us from every part of the world, and constantly has the existing body of laborers been benefited by the accessions. Some of these laborers have brought with them small amounts of capital, and have been all the more welcome on that account. But, however they have come, were it with but a bundle on a stick, there has been room and work enough for all. Labor has had its periods of distress; but these have been due to the interference of government with industry, to false currencies, to extravagant speculation, or to other causes, but not to any real excess of labor. In contradiction, then, of the view that wages are universally determined by the ratio between capital and population, we see that in countries which have not reached the condition of "diminishing returns," the per-capita product may be largely increased while the amount of capital, per man, remains the same, and that it may even be increased, though, of course, not in the same proportion, while the amount of capital, per man, is actually reduced by the accession of new bodies of laborers destitute of accumulations. But suppose now that the condition of "diminishing returns" is reached; that the accessions to population have continued until all the eligible land is taken up, and the first course of simple improvements made. If further accessions are made, we may then expect to see the wages of labor fall, not because there is a greater number to divide among them a predetermined dividend, but because the annual product is not increased proportionally to the increase of labor. Nature fails to respond to fresh applications with its former generosity. Under this condition, five men now produce, as they always must produce, more than four, but not one fourth as much more. The five must, therefore, submit to receive each less than the four had received, that is, the wages of labor must fall. They fall because production has sustained a check, through the limitations of natural agents. But this process of reduction in wages may, and generally will, proceed slowly, first, because for a long time the labor of the new-comer, while it will not be quite as productive as was that of the community upon the average previous to his arrival, will yet not fall far short of it, nature giving long warning against an undue increase of population, and having great patience with men; and, secondly, because the limits of production are being constantly pushed backward by the discovery of new resources, by increased economy of labor, by improvements of method, by the application of distinctly new arts, by the invention of machinery, and by the utilization of waste. But through all these the tendency now is to "diminishing returns," and hence to lower wages. Under these conditions, then, is the wage-fund theory true? We answer with confidence that this theory can never be true, for it excludes altogether the contribution which the new-comer, the additional laborer, makes to the production of the community in which he is so unwelcome an arrival. The wage-fund doctrine regards him as a pure addition to the divisor, without recognizing the fact that his labor must also add something to the dividend. He no longer contributes more, far more to production than the cost of his own subsistence, as in an advancing state of industry, before natural agents are fully occupied and employed. He no longer contributes as much as he requires. But he still contributes something, and that something, however small it may be, helps to swell the amount that can be paid in wages.' 1 See the remarks by Prof. Senior on the possibilities of English agriculture, quoted on p. 97. |