men are members, to see that this and other rules are enforced. 6. In the third stage the steam-engine and the machinery it keeps going have come to share the work. A much larger capital is needed to start a factory than was required for the old workshop. The masters (or capitalists) who employ labor are much fewer relatively. Only a few workmen can expect to become masters themselves. The two classes are therefore much farther apart; and, as the employer cannot know all his workmen, but has to deal with them through his foreman, the chances of misunderstanding and strife are much greater. There is, indeed, more liberty of action. The guild has disappeared, and every man is free to work at any business at which any one will employ him. But the security also of the guild has disappeared, along with its rules to fix the hours of labor, the rate of wages and so forth. 7. To take the place of the guild, the Trade's Union It combined great bodies of the working people to exact better terms than the single workman could secure, as to wages, hours of labor, and other matters. To make this sure, they refused to work with those who had not joined the Union, that they might drive these to act with the rest. In some cases they enforced their demands by strikes, that is, by stopping work until the employers agreed to what they asked. In some cases these strikes were attended with violence and cruelty toward workmen who would not unite in them, or who came from a distance to take the places which the strikers had left. arose. 8. The great question in dispute between the capitalist and the laborer is the division of the joint-product, so that the former shall get a fair profit and the latter fair wages. The law indeed treats the joint-product as the sole property of the capitalist, and recognizes no claim on the part of the laborer except on the ground of a previous agree ment, expressed or understood. But the laborer has a moral right to a fair division, and therefore to fair terms in making his agreement as to the rate of his wages. And it is the interest as well as the duty of his employer to see that he gets fair wages. Ill-paid labor is never really cheap labor, just as slave labor is worth less than that of free workers. Wages which make workmen comfortable and contented, which give them hopefulness and cheerfulness, are those which get the best work out of them. It is profitable as well as right for the employer to attach his workmen to himself by remembering that they are human beings, and by doing the best he can for them in paying them. 9. Some economists, indeed, say it is not wise to pay the workman more than will supply him with the necessities of life, or what he thinks to be such. That rate of wages, they think, will lay just check enough on their marrying to keep the number of workmen always up to the needs of the labormarket, and not let it rise above that. They predict that higher wages will cause such a growth of the laboring class as will pull down wages lower than they were before. This view of the matter amounts to saying that the workingman is a sort of domestic animal, whose price is fixed by supply and demand without his having any will in the matter. It was refuted by the workingmen themselves, when they refused to work at such wages as this theory suggested, and compelled their employers to pay more. If the theory had been true, this success would have been followed by a great fall in wages in the next generation. But the fall did not come, and the masters say they would not think of proposing to go back to the old rate. Thus the workingman showed he was not a domestic animal, but a person, with a will of his own. 10. In dividing the joint-product between the two classes which have produced it, we must take other matters besides profits and wages into the account. (1) The cost of the raw material, and of fuel and water, or of water-power, must be deducted. (2) The wear and tear of building and machinery must be deducted. (3) Interest on the capital at ordinary market rates must be deducted. The capitalist might as well have lent it, as taken the risk of putting it into a factory or a mill. ee After deducting these three we may count what is left as to be divided between wages and profits. And here we must remember that the employer himself is entitled to wages of superintendence," as well as to profit. Profit is simply the payment for the risk he has taken in putting his money into the business. But besides that, he has put at its service his practical intelligence, his business experience, his enterprise and his time. For these he is as much entitled to compensation as is any workman for his labor, or any foreman for his oversight. Very often, indeed, these wages of superintendence are his chief reward, as he may not own the capital, and may have to pay both interest and profit to the actual capitalist. II. In dividing what is left between wages and capital, we find there is a lower line below which wages cannot fall and a higher line above which they cannot rise. (1) They cannot go so low that they will not supply the actual needs of the workingman. He may as well starve in idleness as starve at work. (2) They cannot go so high as to leave no profit to the capitalist. He may as well stop his factory as go on without a profit. These two lines sometimes come very close together. In bad times it often happens that wages which will just support the workingman, leave very little profit on capital, or none at all. But in good times the two lines lie apart, and the great problem is to draw a line of division between them. Where it shall be drawn is not fixed by any natural law, but by agreement. 12. In making this agreement some things favor the workman, and some the capitalist. Thus in a free country, where public opinion demands that the workingman shall live in decency and comfort, this opinion helps to put wages up. In another country public opinion may be on the side of capital, and help to keep them down. 13. Experience shows that in drawing this line it makes. a great difference whether labor is so organized that workmen make their agreement in a body, or each man bargains for himself. In the latter case the capitalist generally can make his own terms, as he can better afford to wait. Now "labor is the most perishable of commodities." It is half gone by noon, while the workman has been trying to sell his day's labor. He cannot wait unless he is certain of getting more by waiting, as the single workingman never is. Even the associated body of workmen may make heavy losses in waiting for better terms in a strike. But they always expect to recoup these losses by higher wages, and this they frequently do. Even when they lose their time and trouble in an unsuccessful strike, they may afterwards recover what they have lost by the mere threat to strike a second time. 14. The natural tendency is for wages to rise higher, while profits remain at much the same figure. This is because, as was shown in the second chapter, the value of things falls steadily with improvements in the methods of producing them. All the results of past labor are thus declining in value, and command lower prices than when first produced. Price is determined not by the cost of producing, but by the cost of reproducing or of replacing. As soon as any improvement has been made, this latter cost falls below the former. Now capital is merely that part of the products of past labor which is used in present labor. It also can be repro duced more easily than it was produced. Its value, therefore, constantly falls, and its owner will get less for the use of it than he did. In the great partnership of capital and labor, it is therefore the laborer who makes better and better terms for himself. While part of the improvement goes to cheapen the product, another part goes to raise the wages of the producer, while the rate of profit remains much the same as before. Thus the workman's wages increase both in amount and in purchasing power. Between 1860 and 1880 the annual wages of skilled workmen in America rose from $460 to $720, while the things they needed to buy fell at rates varying from 26 to 46 per cent. In effect a workman could buy twice as much with his wages in 1880 as in 1860, while the rate of profit for capital had not risen, and that of interest on money had fallen. 15. Improvements in general, therefore, and machinery. in particular, tend to improve the lot of the laborer. Nor does it generally, in the long run, reduce the amount of employment. By cheapening the product, the market for it is enlarged, until it employs more people and at better wages than before. When the Pennsylvania Railroad began to penetrate the Alleghanies, it was said that great harm would be done to the wagoners, who had carried on the commerce of that hill-country. But this single railroad gives far more employment to wagoners alone than the whole trade of Pennsylvania did before it was constructed. So the making of pins by machinery employs far more people than it did in former times, when as the school-book told us, it took ten men to make a pin." ee 16. It is true that when changes are sudden and great, there are distress and suffering for a time among the working people these have affected. Thus the introduction of the power-loom in the early years of the nineteenth century threw the old hand-loom weavers out of work, and caused |