usually come on gradually. There is always a demand for a part of the displaced labor, in the construction of the machines. By reason of the increased facilities, there will be a larger production at the same cost. This will diminish the price; and greatly enlarge the demand, to satisfy which more laborers will be needed. There will also be a more rapid increase of capital, thus furnishing still additional opportunities for labor. The ultimate and not very remote result is, that more laborers are required than before the displacement, and that, too, at better wages; while, by means of the ever-increasing facilities, the cost of the means of living is diminished.

The inventions of Arkwright and Hargreaves, when they were first adopted, so alarmed and exasperated the poor spinners of the neighborhood, who looked upon them as portending starvation to themselves and their families, that they resorted to violence, and tore down the machinery, and drove away the inventors. Yet, I suppose, within the lifetime of these very workmen, and through the influence of these very machines, the demand for labor in the cottonmanufacture was more than doubled; while, for a great part of the time since, probably fifty times as many hands have been employed as previously. The increase of labor-saving machinery within the present century has been almost incalculable; yet wages have been almost constantly increasing, while such commodities as are desired by the laborers are constantly diminishing in value.

But while in general the conversion of circulating into fixed capital is not detrimental, but on the contrary advantageous to the laborer, there are exceptions. This conversion may take place at times and under conditions which render it an evil instead of a benefit. Instances of this are seen in the building of railroads through regions where there

is no demand for them, or the multiplying of houses in a village or city where the increase of population does not warrant it. But these are mistakes which, while they do much mischief temporarily, yet quickly correct themselves from the very nature of the case.

CHAPTER V.

RELATIONS OF CAPITAL AND LABOR.

1. THE relation of capital and labor is, in general, that of mutual dependence. Capital can produce nothing without labor. Labor works at an immense disadvantage without capital. Doubtless the precedence must be given to labor, since it must have created the first capital, and is therefore competent to effect some rude production without capital. But each is essential to any considerable effectiveness of the other, and there is no real antagonism between them. The conflict of capitalists and laborers, so often manifested, arises out of the selfishness and ignorance of the human agents, and not out of the nature of things.

2. Labor is limited by capital. This is a fundamental proposition, but subject to various modifications. We have seen that capital of itself produces nothing. It only furnishes the conditions of successful labor. The capital upon which labor depends consists substantially of (a) the material to be wrought into other forms, (b) real estate, (c) machinery and implements, and (d) the sustenance of the workmen.

The proposition that labor is limited by capital is sometimes interpreted to mean, that, in any community with a given amount of capital, any increase of laborers must diminish the rate of wages, and that any increase of the rate must

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This interpre

diminish the number of laborers employed. tation presumes that all the capital of the community is employed in the most profitable manner, and that the labor applied to it is disposed according to the best methods. But these are conditions seldom likely to co-exist, even if they exist separately.

Still it remains true in general, that, when there is a small amount of capital, only a small amount of labor can be advantageously employed. On the other hand, the more capital there is, other things being equal, the greater will be the demand for labor, and the greater its remuneration.

3. Does the unproductive expenditure of the rich tend to the benefit of the poor by creating a demand for labor? This question has been much discussed, and even yet it is not with all minds clearly settled. Doubtless it does not admit of a categorical answer. The opinion that a profuse and extravagant consumption of wealth is beneficial to the community at large, can hardly be held without qualification by any person. Let us carefully consider the subject in several of its bearings.

Here is a man whose income is $20,000 a year. We will suppose that he consumes all this unproductively. He employs a large retinue of servants, he buys costly delicacies for his table, procures splendid furniture and expensive garments, and gives magnificent entertainments. All this expenditure may be for services rendered, for the work of servants, the products of artisans and artists. It makes a demand for a large amount and a great variety of labor. But nearly all the product of all this labor is consumed within the year: nothing is reserved. It is true, if this is a permanent income, and this is our hypothesis, the same number of laborers, but no morc, can be employed for the next and the subsequent years.

Now, suppose, that, instead of expending the whole $20,000, the proprietor had lived on $5,000. There would then have been $15,000 to add to the permanent capital of the community. This invested in business would have given employment to as many laborers as though it had been used in the other way. At the end of one year it may have little perceptible effect on the demand for labor; but, during the second year, this $15,000 reserved from the first year's income will be still in existence. There will be also the profit accruing from the investment. Instead of being wholly destroyed, as in the other case, it will now furnish opportunity for at least a few more laborers. If the proprietor continues to live on $5,000, and to employ the remainder of his income productively, there will be more than $30,000 to co-operate with labor, instead of the $20,000, as in the first instance. The next year this additional business-capital will exceed $45,000, and will soon go up to $60,000 and $100,ooo. Not only will there be a constantly increasing amount of capital, but, by the increase of production, commodities will be cheapened; and thus there will be a tendency both to an increase of wages and an enlargement of their purchasing power. Economy and not prodigality, on the part of the rich, is an advantage to the laborer.

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