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 ques

tion as follows:

"Thus, supposing," 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 free-how would it be employed? Unless we are to suppose the character of a

large section of a community to be suddenly changed in a leading attribute, the wealth so withdrawn from wages would, in the end, and before long, be restored to wages. The same motives which led to its investment would 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 covetousness is held in check by cov etousness, and the desire for aggrandizement sets limits to its own gratification."

The doctrine here seems to be that the desire for accumulation, or aggrandizement, is a constant force, and thus the effects of covetousness, 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 purchase 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 economical motives. While in particular instances, with persons 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 revenues 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

' Pp. 278-9.

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 covetousness, luxuriousness comes in to consume 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

1 See p. 194.

trusted. And I cannot sufficiently express my astonish ment that an economist of Prof. Cairnes' eminent ability, who made the most important contribution ever offered in modification of the theory of competition, and whe pointed out the frightful hiatus in Bastiat's composition of the Economical Harmonies,' should have fallen into the trap at this point. Anything more contradictory of his own doctrine of the extensive failure of competition, and the want of harmony between the interests of the workman and the employer, as each understands his interests and is prepared to act with reference thereto, than this assumption of the certain restoration to wages of all sums taken for excessive profits, it would be impossible to conceive.

It is a poor rule that doesn't work both ways. Yet writers who hold it to be of no consequence at all that the "capitalists" should, by pressure brought upon the laborers, reduce their wages below the equitable point, since the extra profits thus acquired are certain to be restored. to wages, seem to regard it as a subject of just apprehension lest laborers should, by trades unions or strikes, bring a pressure to bear, on their side, which might reduce profits unduly. But why should not such extra wages be restored to profits, just as certainly, peacefully, and automatically? What difference does it make if the "capitalist," in any given time or place, gets an inadequate profit, or indeed no profit at all? He will only get just so much. more the next time. Certainly, if the laborer can wait to have excessive profits restored to wages, the "capitalist" can wait to have extra wages restored to profits.

This notion of a see-saw between wages and profits is well hit-off in a story which Governor Winthrop tells: "I may upon this occasion report a passage between one of Rowley and his servant. The master being forced to sell

1 See p. 164.

a pair of oxen to pay his servant his wages, told his servant he could keep him no longer, not knowing how to pay him the next year. The servant answered him that he would serve him for more of his cattle. But how shall I do (saith the master) when all my cattle are gone? The servant replied, you shall then serve me, and so you may have your cattle again." Surely, if a man becomes an employer in industry, only because he is a capitalist, and as he is a capitalist, the servant in this story was not more of a wag than of a political economist.

1

No, in a state of imperfect competition, the employer is not the laborer's guardian, or the trustee of his earnings. The workman's legitimate wages are a great deal better in his own pocket, or standing in his own name on the books of the savings bank, than paid into the hands of the employer as extra profits. The reasoning to the contrary, on the assumption of a vital harmony of interests, cannot fail to remind one of the economical plea, with which it is point by point identical, once so widely urged, that the owner's interest would abundantly protect the slave against physical abuse or privation. It is also closely analogous with the political plea by which the privileged classes have always sought to show that it really didn't matter how much political power was entrusted to them; that the interests of rich and poor, high and low were indissolubly bound up together, so that if one suffered, all must suffer with it; and that, therefore, the class most intelligent, most apt for government, having most leisure for public affairs, with, moreover, the largest stake in society, might safely be trusted to make and execute all laws, their own true and permanent interests prohibiting them from any and every course prejudicial to the lower classes, who

1 History of New England, II. 219-20.