Front matter
UNITED STA/^ HJSTRlAL COMMISSION,
HNGTON, D^J
Glass
Preface
In submitting this book to the public, duty to the dead requires that its origin be told. The central thought contained in the following pages and the first effort at its statement belongs to Ira Steward, of Boston, the history of whose life is the history of the labor movement in Massachusetts. For more than twenty years he was the real leader and inspirer of the labor movement in that State ; and to him, more than to any other person, we are indebted for the Massachusetts Labor Bureau — the first, and to-day the best, institution of its kind in the world.
He was the pioneer of the short-hour movement in this country, and after years devoted to the furtherance of its claims, he decided to write what he termed " a statement of the labor question." While thus engaged, the present writer made his acquaintance, from which grew a friendship ripening into a complete unity of thought and purpose.
But Mr. Steward's work was not destined to completion at his hands. After a protracted illness he died, March 13, 1883. When it became evident that he could not recover, he made a special request, strongly re-enforced by his friends, that I should complete his unfinished task.
In accepting this responsibility, however, it was with the expectation that the work was far advanced toward completion. But, to my surprise, and that of vi PREFA CE.
his friends, his papers when examined were found to consist of disconnected matter, made up of more or less extended notes, none of which were in a condition to be used. Hence it became necessary for me to work out the whole subject anew.
Accordingly, while the central thought presented in this book belongs to Ira Steward, its development and presentation is the work of the present writer. By the central thought I mean the idea that the standard of living is the basis of wages, and that social opportunity, or more leisure for the masses, as expressed in less hoars of labor, is the natural means for increasing wages and promoting progress. But this thought was not developed into any theory of wages or progress, nor was it formulated at all ; neither had he collected any historical or statistical data. Indeed, his contribution was conveyed to the writer by verbal statement rather than by anything found in his writings.
I make this explanation here, that Mr. Steward may not be held responsible for the defects of my work. Whatever there is of value in the original thought I reverently lay at his feet, and all the imperfections of its presentation I take to myself.
Although my practical experience with industrial affairs has been very extensive, and my opportunities for observation have been exceptionally good both in Europe and in this country, and although I have for twenty years been a close student of economic questions, it was not until I undertook this task that I began to see the subtlety, complexity, and vastness of the industrial problem.
In order to treat the subject inductively, I made an extensive investigation into the rise and development of the wages system, and I soon found that the labor
PREFACE. VU
question is not a simple detached subject that can be arbitrarily settled by statutory enactments fixing wages, profits, interest, money, etc., but that it is an integral part of the science of social economics ; and that all consideration of the subject by English and continental writers, as well as American, has hitherto failed to recognize the true economic relation the material condition of the masses sustains to industrial and social progress ; and also that the question of wages has been very superficially and often flippantly treated.
Therefore it became clear to me that no adequate treatment of the labor problem is possible without a review of the entire question, and in many respects a reconstruction of the accepted doctrines of economics. This task I found myself logically forced to undertake, the results of which I am now ready to submit to the public.
At this point I met with a new difficulty : I have what will make a seven or eight hundred page book — ■ too large for one volume. But it is naturally divided into two parts, both of which are complete regarding the subjects to which they relate. One is devoted to the much-misunderstood question of wages and its economic and practical relation to social reform. The other, to a presentation of the principles of social economics. It gives me great pleasure to acknowledge that it was by the suggestion of Parke Godwin, LL.D., 1 with whose invaluable assistance and criticism I have been favored throughout this work, that I have decided to publish it in two books in the following order.
The first— the present volume — deals with the burningquestionof the day upon the basis of broadeconomic principles and in a direct, practical manner that can be viii PREFACE.
understood and appreciated by the laboring classes. In this work I have endeavored to discuss the wages problem upon fundamental principles which underlie industrial progress, not merely under the wages system, but in all the stages of social evolution. The next book will be devoted to the consideration of the principles of social economics, including the principles of social progress in general, the principles of economic production, economic distribution, and the principles of practical statesmanship or applied economics.
New York, October, i88y.
Introduction
PAGE
Problem of the hour r
Poverty more dangerous than formerly. . . . i
The laborer helpless when discharged 2
Laborer's social character changed 3
Poverty dangerous to the wealthy classes 4
Popular remedies for poverty 5
True basis for social reform .... 5
Production and distribution, erroneous views regarding 6
Economically inseparable 7
Productive wealth and consumable wealth 7
Concentration of the former 8
Implies wide distribution of the latter 9
High wages induce large production 9
A chief cause of confusion 10
The practical problem stated 11
Object of present work 11
Outline of Part 1 12
Outline of Part II 13
Outline of Part III 14
Chapter I. The Relation Of Labor To Production
Labor and the creation of wealth 15
Fallacy of popular idea concerning 16
Capital not ' ' stored-up labor" labor denned 17
The perishablenesss of labor 18
X CONTENTS.
PAGE
The laborer's share of the product 19
Capital does not rob labor, but aids it 20
Capitals the largest where wages are the highest 21
Society progresses as human labor is lessened 22
Chapter II
INCREASED CONSUMPTION BY THE MASSES THE REAL CAUSE OF IMPROVED MACHINERY.
False view of the employing class 23
The laborer's prosperity the basis of the capitalist's success 24
Capital used only when cheaper than labor 25
Cheaper only when it yields increasing returns 26
Low wages mean hand labor and dear products 27
High wages promote the use of machinery and lowers prices. ... 28
No use for capital in low-wage countries 29
High wages stimulate the use of machinery in two ways 30
Arbitrary rise of. real wages impossible 31
Natural rise of wages always gradual" 31
Effect of rising wages upon profits 32
No permanent disadvantage to the employer 33
Rise of real wages the basis of social progress 34
PART II. The Law of Wages Stated and Historically Established
CHAPTER I.
POPULAR THEORIES OF WAGES CONSIDERED.
Section I. — The Wages-Fund Theory. The doctrine stated 35
Generally accepted in the United States 36
It is the doctrine of low wages 37
Necessary part of the theory that " profits rise as wages fall". ... 37
Accepted by both laborers and employers 38
Monopolies, tariffs, and strikes all based upon it 38
Thornton's attacks and Mill's conversion 39
Professor Cairnes reaffirms and defends the doctrine 40
CONTENTS, xi
PAGE
Cairnes's defence considered 41
A learned effort at twisting terms 43
The theory at best only a truism 44
Wages not paid from capital 45
More paid in wages than any wages-fund contains 46
Wages are paid out of present product 47
Labor always furnished on credit 48
The doctrine inadequate if true 49
Wages not governed by supply and demand ... 50
The facts all against the theory 51
The failure of the doctrine . 52
Section II. — Francis A. Walker s Theory. His theory stated 53
Wages the leavings of rent, interest, and profits 54
Wages paid before profits and rent 55
Destroyed by self-contradiction , 56
Production not the measure of wages 57
Why production is increased 5S
Less complete and more inconsistent than the English theory. ... 59
Section III. — Henry George's Theory. His theory stated in his own words 60
Its logical sequence 61
Necessary part of his scheme , 62
Wages always the lowest where land is free 63
The doctrine everywhere controverted by facts 65
A delusive presentation of the case 66
Wages not fixed by the margin of cultivation 67
Shown by the facts in every industry 68
The theory historically baseless 69
Wages nowhere obey Mr. George's so-called law 70
CHAPTER II.
WAGES AND THE LAW OF WAGES.
Section I. — Wages Defined. Scientific tests of the true law of wages 71
Popular definitions of wages 72
The true definition , , 73
Xll CONTENTS.
Section II. — Real and Nominal Wages. PAGE
Real wages and nominal wages denned 74
Social well-being indicated only by real wages 75
Section III. — The Economic Lazu of Wages. Three industrial states : savagery, slavery, and wages 76
The similarity of the slavery and wages systems 77
The difference in the two systems 78
Labor subject to the law of prices ^ . .. 79
The economic law of prices 80
The law of prices illustrated 81
It fully explains the phenomena 82
The law of prices applied to labor 83
The order of economic movement 84
Arbitrary rise of real wages impossible . 85
Mr. Brassey's experience in India 86
Mistaken view of high wages by employing class 87
Section IV. — Standa7'd of Living
Standard of living denned. The family constitutes the basis 88
The true theory of wages 89
The ' ' iron law" of wages fallacy 90
Mistaken view of Lassalle and others regarding 91
Inversion of economic relations 92
Wages fixed by the dearest laborers 93
Why foreigners can save money here and not at home 94
Using and not saving wealth promotes progress 95
Section V. — The Cost of Living. How the cost of living is determined 96
Prices affect nominal not real wages 97
The law as universal as wage-paying conditions 98
Chapter III. Similarity Of Wages In Asia And Europe In The Thirteenth
CENTURY.
Standard and cost of living in India 100
The rate of wages in India 101
Buchanan and Brassey's experience 102
CONTENTS. xiii
PAGE
Mode of living in China 103
Wages in India and China eight and ten cents per day 104
Style of living in Asia and England. 105
Habitation of English laborer in the thirteenth century 106
Wages in England nine cents per day 107
Difference in the progress in England and Asia since 1300 10S
Both governed by the same law 109
Chapter IV. The Rise Of Real Wages In England In The Fourteenth Century
Section L— Why Real Wages Rose after the Famine in 1315-21.
The first rise of wages in England, errors regarding no
Inferring facts to sustain a bad theory in
Supply and demand fail to explain the phenomena 112
Thorold Rogers's deductions controverted by his own data 113
Unemployed labor and increased wages not incompatible 113
The phenomena easily explained by the true theory of wages. 114
Why wages did not fall with the fall of prices after 1321 115
Rise of real wages result of social causes 116
Social power of the free cities 117
Their influence in obtaining the " Magna Charta" 118
Change in the laborer's social condition 119
Effect upon his wants and character 120
Transformed the rise of nominal into a rise of real wages 120
Section II. — Black Death not the Real Cause of the Rise of Wages.
The black death pestilence in 1349 , 121
Real wages not promoted by famines and pestilence 122
Failure of the " scarcity of labor" theory 123
Why wages only rose to fivepence a day in 1350-51 124
Rise of wages in 1350 due to the same causes as in 1321 125
Increase of the laborer's wants — chimneys, glass windows, etc. . . 126
The new demand made higher wages necessary 127
Efforts of Parliament to prevent the rise of wages 128
The " Statute of Laborers" 129
Its failure to stop the rise of wages 130 xiv CONTENTS.
Chapter V
THE RISE OF REAL WAGES ARRESTED BEFORE I450. HOW IT WAS
BROUGHT ABOUT.
PAGE
Statute of laborers not enforced, increased penalties 132
Statutes of 1360 and 1363 fixing the diet and apparel 133
Law limiting social mobility, fatal blow to social opportunity .... 135
The law of 1388 rigidly enforced 136
Means for cutting off social opportunity completed (1406). ...... 137
The rise of real wages arrested before 1444 138
Wages as fixed by the statutes of 1444, 1496-1514 139
Decline of chartered towns, growth of the open towns 141
Abolition of the guilds. The act of settlement 142
True cause overlooked by historians and economists 143
Blunders of Henry VIII. merely the incident 144
Chapter VI. Movement Of Wages From The Fifteenth To The Nineteenth
CENTURY.
Section I. — Why Nominal Wages do not Rise and Fall with the Rise and Fall of Prices. Rise in nominal but not in real wages 145
Perishableness of labor. Sellers of, numerous and necessitous. . 146 Wages move slower than prices. The last to rise or fall 147
Section II. — Wages and Prices in the Sixteenth Century — Effect of Henry VIIl.'s Depreciation of the Currency.
Necessity of large generalizations 148
Rogers's pessimism the cause of much error 149
Comparison of special dates misleading 150
General averages the only reliable data 151
Full table of prices and wages 1520-82 152
Average price of wheat and labor 1520-82 153
Wages rose twenty-seven and wheat twenty-eight per cent 154
Wages fixed according to the price of bread — " gallon loaf " the basis 155
Cost of living the final standard 156
CONTENTS. xv
Section III. — Wages and Prices daring the Seventeenth, Eighteenth, and Nineteenth Centuries. PAGE
Average price of wheat for the seventeenth century 156
Rate of wages and price of wheat for the eighteenth century 157
Dawn of the factory system. Increased social intercourse 159
Real wages of artisans began to rise again 159
Why agricultural wages did not rise in the same ratio 160
SECTION I. — Wages and the Cost of Living in Different Countries. Causes that affect the cost of living 162
Wages higher in large than in small towns. The law universal. . 163
Trades-union prices unconsciously based upon it 164
Wages and cost of living in different countries 165
Wages in different industries. Why vary in the same locality. . . 167
Section II. — The Income of the Family not Increased by the Wages of the Wife and Children
The man's wages fall as the earnings of wife and children increase. 168
Wages of men lower in factories than in other industries 169
Wage-earners and cost of living in 65 industries compared 170
Women's wages fixed by the same law 172
Why they are lower than men's 173
Wages and cost of living of women 174
Section III. — The Theory Further Sustained by Dr. Engel's Lata of Expenditures. •
Dr. Engel's law of expenditures stated 175
Its logical sequence. Wants and wages in different countries... . 176
Wages the highest where social wants are the largest 177
The evidence ample and conclusive 178
Chapter VIII
wages under piece-work.
" Piece-work" a delusive expression 179
" Day-work" wages the basis of " piece-work" prices i8r xvi CONTENTS.
PAGE
Historical basis of the law 182
" Piece-work" prices higher in large cities 183
" Piece-work" prices fall, day wages rise as machinery is improved. 184
Sliding scale of " piece-work" prices 185
" Piece-work" prices and " day-work" wages obey the same law. 186
Section I. — How the Standard of Living is Determined. Standard of living, wants the basis of 187
Economic wants defined 188
Man's economic wants the incentive to all productive effort 189
Production governed by consumption 190
Section II. — Social Wants, How Dete7'?7iined. Man, a twofold being, has physical wants and social wants 190
The power of habit universal 191
It affects all classes on all lines 192
Social influence of custom. Observed by economists 193
True regulating principle in the law of wages 194
True test of economic soundness 195
Section III. — The Influences which Determine Social Character. Man's state at birth 195
His inherent and acquired wants 196
Internal and external forces — influence of 197
Easy to do as others do 198
Social influences irresistible. The power of ostracism 199
Fixity of habit the guaranty of social permanence 200
How new wants are created 201
Social intercourse the basis of new wants 202
Social wants the basis of character 203
Social character the basis of wages 203
CONTENTS. XV11
Part III
Principles and Methods of Social Reform. CHAPTER I.
POPULAR REMEDIES FOR SOCIAL EVILS.
Section I. — Industrial Progress the Cause not the Consequence of Political Freedom. PAGE
Political freedom the effect of industrial progress 205
Popular inversion of the order of progress 206
The economic condition of woman 207
Her social disadvantages the cause of her low wages 208
Drunkenness a social disease 209
The saloon competes with the home 210
The saloon recedes as the home improves 211
Section II. — Rent, Profit, Tax, and Atoney Reforms. Basic error of these reforms 212
The economic function of money. Scientific basis necessary 213
Currency reform, not a basic social question 214
Section III. — Inadequacy of Socialistic Methods. The true function of the social philosopher 215
The mistake of idealizing. Social law the true basis of reform. . . 216
Socialistic industry impracticable — History of 217
Profit-sharing enterprises. Godin's and Leclaire's success 218
If general, it would reduce wages 219
By same law that children's earnings reduce men's wages 220
Claims of the State Socialist 221
The post-office experiment not a financial success 222
Its successful features not due to State control 223
Specialists required to conduct complex industries 224
Public officials seldom experts 225
Socialistic reforms based upon a mistaken premise 226
Sound sense of the trades-unionists 227
Poverty not due to distribution , 228
Greater production the only remedy for poverty 229 xviil CONTENTS.
CHAPTER II.
HOW TO ENLARGE THE SOCIAL OPPORTUNITIES OF THE MASSES.
PAGE
The first question to be settled 230
Social opportunity defined 231
The true economic fulcrum 232
The basic principle of social reform 233
More leisure for the masses the first condition 234
Leisure and idleness explained and defined 235
Enforced idleness dangerous to society , 236
Helplessness of the discharged laborer 237
Cause of enforced idleness 239
CHAPTER III.
ECONOMIC EFFECT OF REDUCING THE HOURS OF LABOR.
Section IV. — Direct and Immediate Effect of an Eight-Hour System. Number working for wages in the United States 252
Effect of an eight-hour system on enforced idleness 253
Number of unemployed in the United States (1S86) 254
CONTENTS. xix
PAGE
Unemployed in European countries 255
Effect upon wages if adopted only in this country 256
Its adoption in England, France, and Germany also 256
Number of working children under fifteen years of age. 257
Its effect on the general market 258
SECTION V. — The Permanent Economic Effects. The permanent effect the important one 259
The social opportunity eight hours will create 260
Its influence upon the social character of the masses 260
Variation in wages — sphere of their oscillations 261
Influence of less hours upon children 262
Social effect of half-time schools 263
High wages and large productions mean low prices 264
Less hours mean higher wages , 265
CHAPTER IV.
THE EFFECT OF AN EIGHT-HOUR LAW UPON PROFITS.
Evil influence of the popular theory 266
A plausible error 267
Fall of wages not a rise of profits 269
A rise of wages beneficial to all classes 270
Short hours not injurious to capital 271
The adoption of the measure should be general 272
It should be gradual. Duty of employers 273
CHAPTER V.
WHAT WOULD BE ITS EFFECT UPON RENT ?
Rent subject to the same law as profits 274
Poverty of the poor not due to the wealth of the rich 275
Military and industrial states of society 276
Rome an uneconomic state 277
Rising rents incompatible with falling wages 27S
High rents always imply high wages 279
This principle universal 280
Movement of rent in England since 16S9 281
Land-owners richer and products cheaper with high wages 282
Redistribution is not reform. Progress must include all classes . 283 Less hours beneficial to all classes 284
XX CONTENTS.
CHAPTER VI.
FEASIBILITY OF SHORT-HOUR LEGISLATION.
Section I. — History of Factory Legislation in England from 1800 to 1840. PAGE
Short-hour legislation not an untried experiment 285
England the cradle of the factory system 286
Condition of factory operatives in 1800 287
Worked fourteen hours a day and Sundays 288
The first factory bill in 1802 288
Opposition of the manufacturers 289
The use of steam as motive power 290
It enabled the " masters" to evade the law 291
Twelve-hour law for all under sixteen years, 1819 292
Eleven and a half hour law, 1825 — eleven-hour law, 1831 293
Bitter opposition of employers — their doleful prophecies 294
Child-labor law of 1835 provided two hours a day schooling 295
Efforts to repeal the law and counter-movement to extend it 296
Victory for the operatives in 1839 297
The opening of the book is shown; the full text loads in the reader.
Loading the full text…
The end
You’ve reached the end of Wealth and progress; a critical examination of the wages question.