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cent. Nor hare we any grounds for assuming that even a lower rate might not find people still saving, be it from profits, from wages, or from the returns of previously existing capital.

One consideration of importance, which is often lost sight of in this connection, is that the motive to save contains an element besides the expectation of an annual income from the accumulation. Saving is also in the nature of an insurance against the casualties of life. The strength of this motive to self-denial for the sake of insurance alone, is seen in communities where there are no banks, as in many of the departments of France, and no means of ordinary investment, where yet vast sums are accumulated by the peasantry. Not the less in countries where banks afford the safe and sure means of deriving present revenue from savings, does this desire to save, as an insurance against the inevitable ills of life, constitute a considerable part of the motive to accumulation. Men would in a degree provide against old age and sickness, provide for the possible widowhood and orphanage of those dependent on them, were there no interest on money; and saving thus, a very low rate of interest on absolutely safe investments would call their funds into productive use.

Now this view, the justice of which cannot, I think, be questioned, affords the means of judging somewhat more critically the statement of Prof. Fawcett just quoted. Prof. Fawcett says, If wages are enhanced, profits are diminished, and hence less capital will be accumulated. But we know, both from the reason of the case and from the statistics of the savings banks, that capital may be accumulated from wages as well as from profits, whether we understand by that term, the returns of capital, or the

European financiers have been more than once astonished by the enormous accumulations of the French peasantry, when these were tapped by a popular loan.

gains of business. Does any one say, a reduction in the rate of interest would affect the disposition of the laborers to save out of their wages equally with the disposition of the capitalist or the employers, to save out of their earnings? I answer, no, decidedly not. The motive to save, for the sake of insurance, operates with far greater force among the laboring class than among the more fortunate classes. Thus, taking the case of a hundred laborers working for one employer, can it be doubted that the desires of all these individuals, even if we make deduction of spendthrifts and drunkards, to provide against old age, sickness, and the premature death of the bread-winner, would constitute a stronger force to direct towards savings an extra thousand pounds of wages, than would the corresponding desire on the part of the single employer, in the matter of an extra thousand pounds of profits? That this would be so in France or Germany, would not, I think, be questioned by any Frenchman or German. If it should not prove so in England, it would be in no small degree due to the fact that the tenure of the land, the true savings banks of the people, has been so much embarrassed by statute and by judicial fictions.

It should, of course, be expected that a large and sudden increase of wages, due to general industrial causes like that which took place four years ago in the iron and coal 1 trades of Great Britain, would, most likely, human nature being what it is, be employed in ministering, more or less, to folly and vice, or squandered in expenditures, not perhaps hurtful in themselves, but unnecessary, and therefore, as against a strong reason for saving, mischievous. The possible increase of wages which I have in view is rather a steady advance due to the increasing mobility of labor from the growth of the industrial virtues, enabling the

• Coal rose, between July 1871, and February, 1872 in the proportion of 100 to 256, iron following, though at a considerable interval.

wages class to resort more promptly to their inarket, and to press their employers more closely with a truly effective competition. Wages thus won would, in general, be well employed.

So much for that desire to make savings as an insurance against the contingencies of life and health, which is one element of the principle of frugality. Of the other, and doubtless more important, element, the desire to secure an annual income from investments, or from the personal use of capital, it is not necessary to speak here at any length. I know no reason for believing that interest in any country has reached its minimum, that is, the point where the desire to spend overpowers the disposition to save, in such a proportion of instances as to waste capital, or to prevent it from increasing proportionally to population and to the opportunities for its reproductive use at current rates.

It is quite another question whether it makes any difference whether the returns of capital are at the minimum, or are very much above that point. I have already 1 quoted a paragraph from Prof. Perry in which he takes the ground that if, from any cause, an undue amount of the product of industry goes to the share of the capitalist-employer, nothing can defeat the tendency that the excess shall be restored to wages. Prof. Cairnes, in his “Leading Principles," has expressed himself on the same question as follows:

“Thus, snpposing,” he says, “a group of employers to have succeeded, as no doubt would be perfectly possible for them, in temporarily forcing down wages by combination in a particular trade, a portion of their wealth previously invested would now become frec-how would it be employed ? Unless we are to suppose the character of a large section of a commanity to be suddenly ehanged in a leading attribate, the wealth so withdrawn from wages world, in the end, and before locg, be restored to wages. The same motives which led to its investment woald lead to its reinvestment, and once reinvested, the interests of those concerned would cause it to be distributed amongst the several elements of capital in the same proportion as before. In this way corretonsness is held in check by con etousness, and the desire for aggrandizement sets limits to its own gratification."

'Pp. 81-2.

The doctrine here seems to be that the desire for secumulation, or aggrandizement,' is a constant force, and thus the effects of covetonsness, through the employer's efforts to give the laborer as little as may be for his services, are compensated by the effects of covetousness through the employer's efforts to make a profit on the amount thus saved by again employing it in the parchase of labor. The motives to investment and reinvestment are therefore equal.

Now it seems to me that this doctrine is inconsistent with any recognition of the varying strength of the econo mical motives. While in particnlar instances, with per. gons of the miserly disposition, the passion for accumulation may grow with increasing wealth, the observation of every one must convince him that, with the vast majority of men, especially in this age of refinement and of artificial wants, the impulse to spend luxuriously acquires force, after the comforts and decencies of life are once provided for, faster than the impulse to save; that large incomes are not applied as severely and judiciously to further getting as are moderate incomes; that the rich expend their reven nes with a lavishness, a capriciousness and a heedlessness which are unknown to men of smaller means. If this be so, and, with full regard to no inconsiderable num.

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ber of particular instances to the contrary, I do not think it will be denied, then the motives to reinvestment cannot be held to be necessarily equal to the motives to investment; and instead of covetousness being held in check by rovetousness, luxuriousness comes in to consumne a portion at least of such excessive gains.

It needs to be noted, moreover, that, upon Prof. Cairnes' own doctrine of “ non-competing groups,” it would not follow that the sums thus taken from one body of laborers in excessive profits will be restored in wages to the class or classes suffering such losses. Capital having, on Prof. Cairnes' statement, a much higher degree of mobility than labor, the body of laborers to be benefited by such restoration of profits to wages, will not necessarily, or even probably, be identical with that which was in the first instance depleted. And if a right distribution of the products of industry be important to secure the highest industry and zeal in future production, then incontestibly, in addition to all considerations of the iniquity of thus bleeding one class for the benefit of others, we have a strictly economic argument against the theory of the practical indifference of the present proportions of wages and profits.

But we may go further and say that all this kind of reasoning in economics which makes the employing or the capitalist class, in a state of imperfect competition, the guardians of the wages class, in such a way that it really doesn't matter whether the laborer gets all the wages he might, or even, at any specified time, gets any at all, because excessive profits will further enrich those other classes who hold their wealth as a sort of sacred trust for him, so that at another time he will get all the more, if he gets less or nothing now—all this sort of reasoning is much to be dis

See p. 194.

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